A business entity is a legal structure that allows individuals to conduct business. Common types include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each type has different implications for liability, taxation, and management, affecting how the business operates and is perceived by the law. Choosing the right business entity is crucial for entrepreneurs, as it influences personal liability and tax obligations. For instance, a sole proprietorship offers simplicity but exposes the owner to personal liability, while a corporation provides limited liability protection but involves more regulatory requirements.