5. 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 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.
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.