Considerations in Selecting Business Entities
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What are the main characteristics of a particular business entity?
There are numerous characteristics that make a business entity unique. The major characteristics of a business entity are as follows:
Creation & Maintenance - The effort associated with forming and maintaining the entity;
Continuity - The continuity or stability of the organization upon given occurrences;
Ownership & Control - The ownership rights and control of those involved with the business;
Personal Liability - The potential for the personal liability of those involved with the business;
Compensation - The compensation and division of profits among business owners; and
Taxation - The taxation of the organization's earnings and its distributions of profits to the owners.
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This list is certainly not exhaustive; however, these primary characteristics provide a great deal of necessary insight for understanding and choosing a business entity.
Discussion: Why do you think these are the primary characteristics of a business entity? Can you think of any other characteristics of the business entity that would be important to understand when selecting and forming a business entity?