⚖️ Business Entity Challenge

Lesson: 3 Business Entity Structures

In accounting, all businesses are treated as distinct economic units (the Economic Entity Assumption), but their legal and tax treatments differ dramatically:

Attribute	Sole Proprietorship	Partnership	Corporation (C-Corp)
Owners	1 person	2 or more	Stockholders (1 to millions)
Liability	Unlimited personal	Joint & several unlimited	Limited to investment
Taxation	Pass-through (Sched C)	Pass-through (K-1)	Double taxation (Corporate + Div)
Lifespan	Ends with owner	Dissolves upon partner exit	Perpetual existence

Key Rule: Mutual Agency means any partner can sign a binding contract that legally commits all other partners without their prior approval.

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