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How to Create a Business Entity

Last Updated: February 10, 2020 References

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When you decide to start a business, you have many decisions to make. Arguably the most important decision you will make is which form of a business entity to establish. There are many entities to choose from and each will have its own advantages and disadvantages. Evaluate each option from a tax standpoint and assess any legal liability considerations when determining which will best fit your business.

The Sole Proprietorship is a very common business structure because it is the easiest to form and to create. A sole proprietor is an individual that owns an unincorporated business by himself. All of the profits and losses of the sole proprietorship are treated as the income or losses of the individual owner for tax purposes, and must be reported on the owner’s income tax return. Since the sole proprietorship is an unincorporated business, there is no corporate tax.

From a legal standpoint, the sole proprietorship does not exist as a separate entity from the owner of the business, whereas other business structures (such as corporations) exist as separate legal entities. The main area of concern with regard to a sole proprietorship is with liability. With a sole proprietorship, if someone wishes to file a lawsuit against the business, they are essentially suing the business owner, and the business owner will be personally liable for the lawsuit. [1] X Research source In contrast, with a corporation, if someone wishes to sue the corporation, that person is suing only the corporation, and generally the shareholders will not be personally liable for the lawsuit.

Definition & Examples of a Business Entity

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How to Create a Business Entity

A business entity is an organization that’s formed to conduct business. The type of business entity formed determines how a business is taxed and its exposure to liability.

Learn more about how business entities work.

What Is a Business Entity?

Business entities refer to the type or structure of a business, not what it does. How it’s structured affects how taxes are paid and liabilities are determined. Business entities are usually created at the state level, often by filing documents with a state agency such as the Secretary of State.

  • Alternate name: Business structure

How Business Entities Work

Choosing a business entity is one of the first steps new businesses should take. It determines what tax form you file and what happens if your business is sued. Many business structures offer protection for your personal assets. If you’re sued, your business assets could be at risk, but your personal assets won’t be.

New business entities are formed by filing paperwork with your state, if required, and paying any required fees. The best type of business entity depends on the type of business and the number of owners. It’s one of the most important decisions business owners make, so it’s best to consult tax and legal professionals for advice specific to your business.

The Small Business Administration has local offices that can advise on setting up your business. It also partners with vetted organizations that provide free or low-cost business advice, like the Women’s Business Center, and can direct you to appropriate resources.

Types of Business Entities

States recognize several business entities, but most business owners will choose one of five: corporations, general partnerships, limited liability companies, limited liability partnerships, and sole proprietorships.

Sole Proprietorships

A sole proprietorship is an unincorporated business with one owner or two owners who are married. This is the default entity if you start a business and you’re the only owner, and you typically don’t need to register with your state. You may have to obtain a business license or permits depending on the type of business you’re conducting.

Freelancers and consultants are often sole proprietors. With this business entity, you file one tax return rather than separate business and personal tax returns.   With this type of structure, your personal assets could be at risk if your business is sued.

General Partnerships

A general partnership is an unincorporated business with two or more owners, and all partners manage the business and share the profits. It’s the default form of ownership for businesses with multiple owners. As with a sole proprietorship, your personal assets could be at risk if your business is sued, but all the partners share that risk.

Limited Partnership

A limited partnership is a registered business entity. You have two types of partners in this entity: general partners, who actively manage and assume liability for the business, and limited partners, who act only as investors without managing the business, limiting their liability and tax burden.

Partnerships must file returns to report income, deductions, gains, and losses, but they do not pay income tax. The profits and losses are passed through to the partners.  

Corporations

A corporation is an independent, legal entity that separates your personal and business assets. Also called a C corporation, a corporation has shareholders, a board of directors, and officers. Setting up a corporation is more complicated than setting up a sole proprietorship or partnership; there’s more paperwork and fees are higher. One drawback to a C corporation is that profits can be taxed twice—once when the profits are made and a second time when dividends are paid.

S corporations are a special type of corporation that offers pass-through taxation. Profits are passed through to the owners’ personal income without being subject to corporate tax. It avoids the double taxation that can occur with C corporations. S corporations can’t have more than 100 shareholders and all must be U.S. citizens.  

Limited Liability Companies

Limited liability companies (LLCs) offer liability protection. They’re simpler to set up than corporations and you can choose whether it’s treated as a corporation or as a pass-through entity for tax purposes. LLCs can have one owner (referred to as a member) or many, so it’s a useful alternative to sole proprietorship for freelancers and other individual business owners.  

If you’ve decided to start your own business, chances are you want it to make money. How much money may well depend on which structure you choose.

by Jane Haskins, Esq.
updated April 07, 2020 · 3 min read

Forming a business entity is an important way to protect yourself from liability and save money on taxes. A business entity such as a corporation or limited liability company (LLC) is legally a separate “person” from its owners. Here are some key things to keep in mind when you go about forming a business.

Filing Formation Paperwork

To form most business entities, you must file a form with the state agency that handles business filings (usually the secretary of state) along with a filing fee, which varies from state to state. After the state receives and processes your formation paperwork, you’ll receive a certificate confirming that your new company officially exists.

In addition, every business entity should have documents that describe the rights and responsibilities of the people who own and operate the company. Although these documents are not filed with the state, they are important guidelines for running your business and can prevent costly conflicts later.

Setting Up Financial and Tax Accounts

It’s important to keep business and personal expenses separate. Here are some ways to do that:

  • Get a federal Employer Identification Number (EIN). Most businesses must have an EIN, the business equivalent of a Social Security number.
  • Open a business bank account. Take your business formation certificate and EIN to a bank or credit union to open a business account. Consider getting a business credit card as well.
  • Register with state and local taxing and licensing agencies. You must register with your state taxing authority to pay state taxes, including income and sales tax. Businesses with employees must also pay various employment-related taxes.

Getting Business Insurance

Business entity formation can protect your personal assets if your business is sued, but it can’t protect the business itself from potentially devastating losses due to a personal injury lawsuit, fire, theft, flood or data breach. For that kind of protection, you need business insurance. There are several types of business insurance for different kinds of risk. An insurance agent who specializes in small business insurance can help you get the coverage you need.

Using Contracts to Protect Yourself

Most small businesses need a basic set of contracts to cover their most common transactions. These might include:

  • Nondisclosure agreement (NDA). Protects the business’s confidential information by requiring that people keep information about your business private.
  • Employment contracts. Provides written employment terms.
  • Intellectual property assignment. Allows the transfer of property rights while protecting the rights of all parties.
  • Terms and conditions. Specifies the rules governing the use of a website.

Written contracts are important because they help avoid misunderstandings and make it easier to enforce an agreement in court.

Staying Up-to-Date with State Agencies

Your state’s laws may require business entities to keep certain records. These might include meeting minutes, resolutions and ownership records. You may also need to file an annual report and pay an annual fee. The rules vary based upon the type of entity, and from state to state, so consult your state’s laws or a business lawyer to learn more about your obligations.

If you will do business in a state other than the one you formed your business in, you must register to do business in that state. The procedure is similar to the one you followed when forming your business, and it may require additional tax and reporting obligations in the other state.

To maximize your protection and avoid tax penalties, always keep personal and business finances separate, observe proper procedures and keep complete and accurate records, maintain adequate insurance, and file and pay taxes on time.

Are you registered, licensed and collecting the right tax? Being wrong is expensive.

One of the first questions many vacation rental owners ask is should they form an LLC or similar business entity. When you start renting a property on a short-term basis (which is usually less than 30 days but varies by each state) you are usually engaged in a commercial business activity, which triggers various regulatory and tax requirements. There is no requirement for you to form a business entity (i.e. Limited Liability Corporation (LLC)) or obtain a business name. The majority of vacation rentals operate as an individual or what is referred to as a sole proprietor.

Forming an LLC or similar business entity is a personal decision and is not necessary. Many property owners do form LLC’s, or a similar entity, to better organize their rental affairs, separate the rental activity from their personal activity, create a vehicle to purchase and manage the rental with friends, relatives, other investors, and provide protection for their personal assets. It is not necessary to have the actual ownership or deed of the property in the name of the LLC. Many people own the vacation home personally, but create an LLC for their rental activity.

Setting up a business entity is fairly simple and can even be done on your own. Highlighted below are the basic steps to form an LLC. While each state can vary slightly, the basic steps are the same:

  • Select your LLC name. You will need to search the secretary of state or division of corporation website in the state where you would like to form your LLC, to see if the name is available.
  • Apply for a FEIN (Federal Tax Identification Number) with the IRS, which can be completed online for no fee.
  • Complete and file your forms, frequently called the articles of organization, and pay any required registration fees.
  • Create your LLC operating agreement. An operating agreement may not be required but is a good idea if you have other members/investors in your vacation rental venture.
  • You can complete these steps with your Secretary of State or Division of Corporations. Their website will have the basic forms you need to file and create your LLC. You may want to consult an attorney if you need to prepare a detailed operating agreement.

If you decide to form an LLC or other business entity, it is recommended that you form it in the same state where your vacation rental is located. If you don’t, you will need to register your ‘out of state’ LLC as a foreign corporation in the state where your rental property is located. Foreign corporation registration forms can also be found on Secretary of State/Division of Corporation website and may be completed without a lawyer. You will usually need to obtain a certificate of good standing from your home state for the LLC and have a registered agent in state where your rental is located.

Whether you decide to form a business entity like an LLC or not, you will still need to register and obtain any required state and local licenses and adhere to state and local sales & occupancy tax rules (see Getting Registered & Licensed to Do Business).

Are you registered, licensed and collecting the right tax? Being wrong is expensive.

How to Create a Business Entity

After retaining your financial advisor (attorney, CPA, etc.), you’ll want to run through the following checklist to ensure that you hit every necessary step in the formation process when you create a business entity.

  1. Compare the tax aspects of various business entities.
  2. Choose a business entity.
  3. Consult an attorney regarding federal and state laws governing creation, ownership and operation of the entity.
  4. Draft and execute the agreement among the principals.
  5. File with the state the certificate of assumed name (DBA) (if applicable).
  6. Obtain a federal employer identification number (EIN).
  7. Obtain state tax identification numbers. File the required documents with the state unemployment and sales tax authorities.
  8. Obtain required city/county/local business licenses/permits.
  9. Establish a business checking account.
  10. Fund the entity.
  11. Conduct necessary corporate or other organizational meetings. Elect board of directors.
  12. Establish books (accounting records) for the new entity.
  13. Consult with an insurance professional to obtain liability and workers’ compensation coverage.
  14. Review wills and estate plans of the owners.
  15. Hire employees.
  • «« Can an Attorney Represent Multiple Parties with Conflicting Interests?
  • Is it Better to Form an LLC or an S Corporation? »»

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Why Separate Entity Protection Is Important for Your Business

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How to Create a Business Entity

The definition of a separate entity is easy to figure out, but, as they say, the devil is in the details. A separate entity is a business that is separate legally and financially from its owner or owners.

In terms of day-to-day business, a separate entity runs separately from the owner, with a separate bank account and transactions, buying and selling products or services or both, and receiving and paying out its own money. Everything done by the business entity is separate from what is done by the individual owner(s).

Why Should I Make My Business a Separate Entity?

You can legally set up any type of business, but the primary reason for setting up a separate entity is to separate the liability of the business from the liability of the individual owner(s). A business or individual can have liability for debts and also for lawsuits for negligence or illegal actions.

The concept of liability protection is important because most people can’t afford the higher liability incurred by a business.

If you don’t set up your business as a separate entity, you are liable for everything that happens in the business, including liability for debts and lawsuits.

The concept of the separate entity is shown in the term “corporate shield” or “corporate veil,” meaning that the corporation (or other separate entity) is shielded from liability. If the business is a separate entity, that shield or veil can’t be pierced.

For example, you can limit liability by purchasing liability insurance protection, but why should you as an individual pay for insurance for the liability of your business? If you don’t have your business set up as a separate entity, you will need lots more personal liability protection, at a higher cost.

  • If your business makes and sells products, there is product liability involved if a customer is injured or becomes sick from using a product.
  • If your business has employees, there is a liability for all kinds of lawsuits, including discrimination and harassment claims, and employee injuries and accidents.

If you don’t keep the separate entity clearly separate, you personally could be liable for any lawsuits or judgments against the business. This might mean personal bankruptcy or selling your personal assets to pay for lawsuits.

What Types of Businesses are Separate Entities?

  • A corporation is a separate entity. The business registers with a state and keeps its business separate through its transactions and ownership documents. All types of corporations, including S corporations, Professional Corporations, and Personal Service Corporations, are separate entities.
  • A limited liability company (LLC) is also a separate entity because the LLC owners (called members) have their liability limited to their contribution to the business.
  • A partnership is not a separate entity. The partners are each liable personally for the debts and lawsuits against the partnership. But, some specific types of partnership are designated as having limited liability and are separate entities. You may be able to form a Limited Liability Partnership (LLP) as a separate entity. Some partnerships formed by a group of professionals (attorneys, CPAs, or architects, for example) as a separate entity called a Professional Limited Liability Partnership.
  • A sole proprietor business is not a separate entity. The sole proprietor business is one person, and that person and the business are together. The debts and legal liabilities of the business and the individual are combined.

How Do I Keep My Business Entity Separate?

Even though you have set up your business as a separate entity by registering it with your state, that’s just the beginning. The business must be managed on a day-to-day basis so it’s completely obvious to the IRS and the legal system that the business is a separate entity.

Some ways you can set up your business recordkeeping, accounting, and other processes so they are separate from your personal transactions:

The first things you need are:

  • A separate business checking account.
  • A business tax identification number called an Employee ID Number (EIN). This number is like a Social Security Number for a business. It’s easy to apply for an EIN online.

Then, make sure all transactions between yourself personally and the business establish your business as a separate entity.

Any money you withdraw from or put into the business must have written documentation.

  • If you pay yourself from the business, it should be as an owner’s draw, with a business check.
  • If you pay yourself as an employee, use the same payment process and documents as for other employees, including withholding and paying employment taxes. (This goes for family members who work in the business too.)
  • If you put money into the business, it must be as a loan (with loan documents) or as an investment (with stock certificates and other appropriate documentation). You must also give all dividend payments as you would other stockholders.
  • Keep tax payments for the business and you personally separate. For example, pay for tax preparation for your business and personal income taxes with separate checks, even if they are both on your personal return.

if you or another owner owns any assets (like a building or a vehicle) that are used by this business, you will need to record payments in the same way as any other separate entity. For example, if the business is leasing space in a building you own, make sure the monthly lease payments are recorded to show the expense to the business and the income to your personal bank account (or another account separate from this business).

The concept of a separate entity is important, so be sure to create a good accounting system and use the system for recordkeeping purposes, and in case of an audit.

Watch Video on “Creating/Structuring a Business Entity” (I Recommend you watch the video – whether you have an entity/company already or you are looking to create your 1st entity):

I now use Legal Zoom to create my LLC’s and Corporations. Click HERE to obtain your company or LLC from Legal Zoom.

To become listed in the yellow pages, click here

Disclaimer: Speak to your business attorney and tax qualified professional/CPA before setting up a new company.

VIDEO TUTORIAL SUMMARY:

  • Create multiple companies (With personal credit, you only have one social security number. With business credit, you can have as many business credit profiles as you would like!)
  • Use a neutral name “April Ventures, Inc”. The company April Ventures does not state what they do in their business name (unlike April Real Estate). This is an important step allowing you to position yourself as any company that money is being lent to in this market.
  • For your primary line of business, use “business management services” or “business management consulting”, etc. If you put “real estate”, which presently – most lenders are weary to lend money to- then it would be harder to obtain money. Most lenders are lending to business management companies because their risk is much lower! Plus, as a business management company, there is more functions you can perform (ie- managing your business, real estate, teaching, public speaking, consulting, internet marketing, etc).
  • Obtain a federal tax id #

(To view the Advanced Tips, you must be an active member with BCW Online)…

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Summary of the process to establish a business in PA

Assuming you have the necessary information at the ready, you can create a subsidiary in as little time as a day. “Necessary information” includes information such as the company name, address, contact persons, intended capitalization, and similar items. Once the company is formed, you will likely be required to draft organizational resolutions and other “housekeeping” items may be required — such as establishing a bank account, adopting bylaws, and arranging financing.

Legal fees associated with incorporating or otherwise establishing a subsidiary typically range from $1,000-$2,000 (U.S.), depending on the nature and complexity of the subsidiary relationship. The Commonwealth of Pennsylvania charges a fee of $125 to file the documents needed to register your company.

The decision to organize an enterprise as either a corporation or as an LLC (“limited liability company”) is made on a case-by-case basis according to each enterprise’s unique requirements. While both structures provide a degree of “limited liability” (which generally prevents creditors from targeting the personal assets of the business owners to satisfy the liabilities owed by the company) we recommend that firms seek appropriate legal and accounting advice before determining whether to conduct business as a corporation or an LLC. Often, international companies forming U.S.-based subsidiaries will opt for the corporate entity structure.

Until recently, Delaware was known for having certain unique laws that protect corporate directors from liability for decisions that they make on behalf of their corporation, as well as for having a number of legal decisions that provide helpful guidance as to how corporate matters will be decided in the future — thus promoting legal certainty and planning. In 1988, however, Pennsylvania revised its Business Corporation Law so that it now provides substantially the same protection to directors as Delaware does, thus closing the gap between the two legal systems. Again, it is best to discuss these matters with legal counsel.

While there is no way to completely shield an enterprise from litigation or liability, firms can significantly reduce these risks by following certain well-established business practices, such as ensuring that the terms of contracts are clear, and by anticipating problems before they emerge. Maintaining accurate books and records (with the Subsidiary’s transactions and funds being completely segregated from those of the Parent) also helps to limit liability. Of course forming good working relationships with suppliers and customers, and retaining counsel to review contracts and other legal documents are also effective ways to reduce the likelihood of such problems.

As a general rule, firms are not required to pay income taxes (and are not assessed any by the state) in years in which they do not generate any profits.

Pennsylvania does, however, have a Capital Stock and Franchise Tax (CSFT) that is assessed against the ownership interests of both Corporations and LLCs. The amount of CSFT that is charged is determined by examining value of the enterprise based on a fixed formula, which primarily examines an enterprise’s net income and net worth. As a result, the amount of the CSFT that is ultimately assessed against your firm could be very low, if there is no profit. In recent years, Pennsylvania has been steadily lowering the rate of the CSFT, which will be entirely phased out by the year 2016.

Also, tax losses incurred in the early years of operations may be available to offset profits in later years.

The corporate net income tax (CNI) is only assessed against corporations — not most LLCs. Secondly, and perhaps more importantly, the income tax is only one consideration in determining where to do business. Other factors include the availability of suitable facilities, qualified workers, efficient logistics and transportation services, and location relative to major markets. Pennsylvania leads in all of these categories. Other considerations include the level of support that the government and other entities will provide for new businesses, and the desirable living opportunities that Pennsylvania offers.

It is important to remember that firms are generally required to pay CNI tax in each state in which they conduct business, according to the proportion of the business activities that they perform in each state. In addition, firms located in Pennsylvania can often reduce (or offset) the amount of CNI tax that they would otherwise be required to pay in Pennsylvania based on the amount of taxes they pay to other states. This means that if a corporation from another state does business in Pennsylvania, it will be required to pay Pennsylvania corporate net income tax based on the amount of business it does in Pennsylvania. Conversely, Pennsylvania corporations that also conduct operations in other states often are able to reduce Pennsylvania income tax liabilities through the appointment of taxable income to other jurisdictions.

Additionally, Pennsylvania recently moved to a 100 percent single sales factor to apportion income to the commonwealth for corporate net income tax purposes.

More In File

Tax information, tools, and resources for businesses and self- employed.

Prepare Your Taxes

  • Business Tax Credits
  • Deduct Expenses
  • Calculate Your Employment Taxes
  • Employment Taxes
  • Excise Taxes
  • Gift Taxes

File or Pay Your Taxes

  • Estimated Taxes
  • Order Forms Online
  • Electronic Federal Tax Payment System (EFTPS)

Run Your Business

  • Start a Business
  • Operate a Business
  • Close a Business

Business Types

Sole Proprietorship
Someone who owns an unincorporated business by themselves.

Partnership
A relationship existing between two or more persons who join to carry on a trade or business.

International Business
Foreign businesses with activities in the U.S. or domestic businesses with activities outside the U.S.

Corporation
A legal entity that is separate and distinct from its owners.

S Corporation
Corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.

Limited Liability Company or LLC
A corporate structure whereby the members of the company cannot be held personally liable for the company’s debts or liabilities.

Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.

How to Create a Business Entity

Maybe you have taken a job as a contractor within the company where you used to be an employee. Or maybe you were hired as an independent contractor or freelancer to do work for a company. In any case, as a freelancer or independent contractor, you are not an employee. You are self-employed. Being an independent contractor seems easy, right? You just go to work and collect the money. But there are a few easy steps to making your business real.

The Reality of Self-Employment

As an independent contractor, you will have income, probably in the form of a 1099-MISC, which you must pay taxes on. If you don’t set yourself up as a business entity and start keeping a record of expenses so you can deduct them, you will have to pay tax on the entire amount of your income.

Since you don’t have an employer to withhold federal and state income taxes from your income, so you will need to do your withholding. You must pay self-employment tax (Social Security and Medicare) on your income from self-employment. No one pays this for you, so you must plan to set aside this money (15.2 percent of your profits) to pay with your tax return.

Most importantly, you will have no one to pay your insurance (health insurance, liability protection), so you will have to pay it yourself or do without.

The Benefit of Setting up a Business Entity

If you set up a business entity such as a sole proprietorship, or better, a limited liability company, you can deduct legitimate business expenses to minimize your tax bill. You can also use the deductions to minimize your profit and lessen your self-employment tax burden.

You can use your business entity to purchase insurance and take the deductions for this expense, again minimizing your tax bill. Setting up an entity minimizes the chance that the IRS will say your business is just a hobby or deny your deductions.

You can set up simply as a sole proprietor, or you can go the next step and register as a limited liability company or other entity. In any case, taking your business to the next level by establishing a business entity separate from your personal finances is worth your time and trouble.

Now that we have that out of the way let’s talk about starting your independent contractor business. First, understand that there are a lot of things you DON’T NEED to do when starting a business, like having employees and registering with your state. But there are three things you should do to start off right:

Select and Register a Business Name

When you have selected a business name, don’t rush out and buy business cards and stationery yet. First, check to be sure no one else is using that name. You may need to file a fictitious name (trade name or d/b/a) statement if your business name is different from the name of your company. Learn more about these steps in registering your business name here.

Once you have a business name, you can get a business location and begin to create all the marketing and promotion items you’ll need, like a website, business cards, and advertising brochures. Your business name and address can also be used to apply for an Employer ID (tax ID) for your business. The Employer ID is necessary for most types of businesses, even if they don’t have employees.

Get a Business Checking Account

Getting a business checking account will help establish that separate business entity, so it is clear to the IRS – and anyone else who cares – that you and your business are separate entities.

Once you have a business checking account, you can put money in as your own investment and begin paying for all the things you need to get started in your business. And of course, if you have money coming in you can put it into your business bank account to pay for startup costs. It’s best to use a business account instead of a personal account so you don’t get the payments and income confused.

Set up a Simple Business Recordkeeping System

Capture the information you need to support your use of legitimate business deductions. Making sure you keep track of business income and expenses will help you know how your business is doing, and you will be able to deduct those expenses from your income at tax time.

You should create a business startup budget to see what you’ll need to spend to get started. Then, keeping records also means you can tell how your business is doing, by preparing and reviewing your business financial statements each month, including a profit and loss statement and balance sheet.

How to create an Entity in Microsoft CRM?

Create an Entity in Microsoft CRM : Entity in Microsoft CRM is like a database table which has a set of attributes and each attribute represents a data item of a particular type. In Microsoft CRM, we have three types of Entities, they are System entities, business entities and Custom entities. Let us learn how to create custom Entity in Microsoft CRM.

We can create new entities for your Microsoft Dynamics 365 implementation to address specific business requirements. After you create a custom entity, additional tasks are required to ensure that the entity is accessible to your users.

Steps to create custom entity in Microsoft CRM.

  • Navigate to Settings | Customizations.

How to Create a Business Entity

  • Now click on click the customize the system.

How to Create a Business Entity

  • Now a list of all solution (managed and unmanaged solutions) that are available in Microsoft 365 available.
  • Select tutorialkart solution to create an entity.
  • Click on Entities, then on the command bar, click New as shown below.

How to Create a Business Entity

  • Enter the Display Name and Plural Name that will be used for this entity throughout Microsoft Dynamics 365.
  • In name box, change the default name and the name field will not be changed.

How to Create a Business Entity

  • In the Ownership list, select one of the following:
    • User or Team. Records for this entity can be owned by individual users or by teams. Security can be defined according to the business unit with which the current owner is associated. For example, contact records are set to User or Team.
    • Organization. Records for this entity are used for reference by all Microsoft Dynamics 365 users. Individual users or teams can’t own these records. For example, product records are set to Organization.
  • Under Areas that display this entity, select the areas where this entity will be displayed in the Microsoft Dynamics 365 user interface.
  • Finally click on Save button.

How to Create a Business Entity

We have successfully created custom entity called “Employer” in tutorialkart solution.

How to change custom entity Icons.

When you create a custom entity, it is automatically assigned a default icon, and all custom entities by default use the same icon. If your organization has several custom entities, it can be helpful to change the icon associated with one or more custom entities to help users differentiate them. To change custom entity Icons, follow the steps given below.

You can upload two types of entity icons for each custom entity:

  • Icon in web application. This icon should be:
    • 16 x 16 pixels in size.
    • In .gif, .png, or .jpg format.
    • No larger than 10 kilobytes.
  • Icon for entity forms. This icon should be:
    • 32 x 32 pixels in size.
    • 16 colors.
    • In .ico format.
    • No larger than 10 kilobytes.

Now navigate to Settings | Customize | Customize the settings.

How to Create a Business Entity

  • Expand Entities and click on Update Icons as shown below.

In the Select New Icons dialog box, under Icon in Web application or Icon for Entity Forms, to the right of New Icon, click the Browse button , select the appropriate image file, and then click OK

  • Click on Ok button and Save the changes.
  • Now we have to publish all customizations, click on Publish All Customizations.

We have successfully changed Icons for custom entity.

Conclusion : In this Microsoft CRM tutorial, we have learned about how to create an Entity in Microsoft CRM and how to change custom entity Icons. In our next Microsoft CRM tutorial, we will learn about how to create a record in Dynamics 365.