The term "Legal Structure" refers to the framework that defines how a business or organization is organized and operates under the law. This structure determines the legal responsibilities, liabilities, and tax obligations of the entity. Common types of legal structures include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Choosing the right legal structure is crucial for any business, as it affects everything from daily operations to personal liability. For instance, a corporation offers limited liability protection to its owners, while a sole proprietorship does not. Understanding these differences helps entrepreneurs make informed decisions.