What are the various forms of business entity?

In New Jersey, there are various forms of business entity, all of which have different types of legal standing and distinct advantages and disadvantages. The four most common forms are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. A sole proprietorship is a business owned by one person. As the individual is the only owner, the proprietor is personally responsible for all debts and liabilities. In addition, the proprietor is not taxed separately from the business. A partnership is similar to a sole proprietorship, in that it is owned by two or more individuals. However, each partner is jointly and severally liable for the debts and liabilities of the business. As with a sole proprietorship, each partner is not taxed separately from the business. The Limited Liability Company (LLC) is a hybrid between a sole proprietorship and a corporation. LLCs are owned by one or more "members," who receive limited liability protection from the debts and liabilities of the business. The LLC itself is taxed like a partnership, but may also elect to be taxed as a corporation. Finally, a corporation is an independent legal entity created under state law. Shareholders have limited liability, meaning that the debts and liabilities of the corporation do not attach to the shareholders. Corporations can be taxed either as C-corporations or as S-corporations. Each of these forms of business entity has its own advantages and disadvantages and its own distinct requirements for formation. The right form of business entity for a particular business depends on its individual goals and the needs of its owners.

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What are the various forms of business entity?

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