Business Entity Types: A Simple Guide

Resources and Information provided by our partners at

Every business has an “entity type”, even if you don’t know it.

We’re here to walk you through the key business entity types and help you land on the one most applicable to you.

The five main entity types

Almost every business falls into one of these categories:

Business Entity Type


Sole Proprietorship

One person owns and controls the business. The owner pays all taxes and debts personally. here’s no corporate entity. They report profits and losses on Schedule C of their personal tax return.


Two or more individuals share control and ownership of the business. Partners file their taxes for their own share of profits. Costs, debts, and losses pass through to them equally.


One or more owners, and the corporation is supervised by shareholders, board of directors, and management. The business is a separate entity that pays corporate taxes. Usually reserved for larger businesses.