What are the different types of business entities?
In Washington, there are several different types of business entities that can be created. The most common forms of business entities in the state are sole proprietorship, partnerships, limited liability companies (LLCs), corporations, and limited partnerships. A sole proprietorship is when a single individual owns and operates a business. The individual is responsible for all the profits, losses, debts, and liabilities associated with the business. Partnerships are similar to sole proprietorship except that two or more individuals own and manage the business together. Each partner is responsible for the debts, profits, and losses associated with the business. Limited liability companies (LLCs) are a type of business entity that combine both the elements of a corporation and a partnership. LLCs are owned by one or more members and have limited legal liability for the debts and liabilities of the business. Corporations are a type of business entity that provides limited liability for its owners. Corporations can be formed by one or more individuals and they are required to register with the Washington Secretary of State’s office in order to be recognized as a legal business entity. Finally, limited partnerships are similar to corporations in that they provide limited liability for their owners. However, limited partnerships require two or more owners and at least one of the owners must take responsibility for the debts and liabilities of the business.
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