A "business type" refers to the classification of a business based on its structure and operations. Common types include sole proprietorships, partnerships, corporations, and limited liability companies (LLCs). Each type has distinct legal and tax implications, affecting how the business is managed and how profits are distributed. Choosing the right business type is crucial for entrepreneurs, as it influences liability, taxation, and regulatory requirements. For instance, a sole proprietorship is easy to set up but offers no personal liability protection, while a corporation provides limited liability but involves more complex regulations and tax obligations.