The word entity means something that exists independently’. A business entity is a business that exists independently of those who own the business. There are three main categories of business which will be found in all countries, although with different titles in different ones. This chapter uses the terminology common to the UK. The three main categories are: sole trader, partnership and limited liability company. This list is by no means exhaustive but provides sufficient variety to allow explanation of the usefulness of most accounting practices and their application. Before reading the next sections, take out a newspaper with business advertisements or a business telephone directory, or take a walk down your local high street or drive round the trading estate. Write down the names of five businesses, shops or other organisations. Then read the sections and attempt to match your list against the information provided in each.