A business is considered an entity when it is recognized as a separate and distinct legal or economic unit from its owners or other entities. Whether your business is an entity depends on several factors, including its legal structure and how it is treated for legal, tax, and financial purposes.

Here are some common legal structures that create distinct business entities:

1. Corporation (C-Corporation or S-Corporation): Corporations are separate legal entities from their owners (shareholders). They are created by filing articles of incorporation with the state and are governed by corporate laws. Corporations offer limited liability protection to shareholders and have a separate legal existence.
2. Limited Liability Company (LLC): LLCs are hybrid entities that combine elements of partnerships and corporations. They are recognized as separate legal entities and provide limited liability protection to their members (owners). LLCs are formed by filing articles of organization with the state.
3. Partnership: While partnerships do not create a separate legal entity, they are considered separate economic entities. In a general partnership, the individual partners are personally liable for the partnership’s debts and obligations. In a limited partnership (LP) or limited liability partnership (LLP), some partners may have limited liability.
4. Sole Proprietorship: A sole proprietorship is not a separate legal entity from its owner. The business and the owner are treated as one entity for legal and tax purposes. This structure does not provide limited liability protection.
5. Nonprofit Organization: Nonprofits are separate entities formed for charitable, educational, religious, or other specific purposes. They are recognized as separate entities for tax-exempt status and legal purposes.
6. Cooperative: Cooperatives are business entities owned and controlled by their members. They operate as separate economic entities, and the legal structure may vary depending on the type of cooperative.

To determine if your business is an entity, consider the following:

• Legal Formation: Did you legally establish your business by filing the required documents with the appropriate government authority (e.g., articles of incorporation, articles of organization, partnership agreement)?
• Limited Liability: Does your business structure provide limited liability protection to its owners or members? Limited liability implies that personal assets are generally protected from business debts and obligations.
• Separate Tax Identification: Does your business have its own federal employer identification number (EIN) or taxpayer identification number (TIN) distinct from your personal social security number (SSN)?
• Compliance with Business Laws: Are you adhering to the legal requirements and regulations specific to your business structure, such as corporate governance, annual filings, and record-keeping?
• Financial Separation: Are you maintaining separate financial accounts, records, and transactions for your business, distinct from your personal finances?

Consult with a legal professional or certified public accountant (CPA) to ensure that your business is properly recognized as an entity based on its legal structure and that you are complying with all legal and financial requirements specific to your business type.