Partnership Vs Corporation

Partnership Vs Corporation

Partnerships and corporations are similar in that they are both business organizations that are owned by a number of people. However, the similarities between these two types of organizations usually end there, as the partners in a partnership are typically faced with issues that are completely different from the issues that the shareholders of a corporation face.

Partnership Vs Corporation - Liability

In most cases, a corporate shareholder can only be held liable for the amount that she invested, while a partner may be held liable for any and all of the partnership's obligations.

Partnership Vs Corporation - Management

According to law, a corporation must be managed by a board of directors elected by the corporation's shareholders. The management structure of a partnership, however, is decided by its partners.

Partnership Corporation - Recordkeeping

A partnership is not typically required to keep records of its meetings and other administrative activities, but a corporation is required to keep records of these activities.

Partnership Vs Corporation - Management

TaxesA partnership divides its taxable income amongst its partners to pay the taxes. A corporation, however, is required to pay taxes itself and the shareholders are required to pay taxes on any dividends.

Partnership Vs Corporation - Time Frame

A corporation can exist indefinitely, but a partnership will usually only exist until a single partner dies, chooses to leave or is unable to perform his duties and/or responsibilities.

The issue of corporation versus partnership versus corporation has been discussed in the context of organizing the start-up corporation. A material distinction between taxation of income and gains was restored in 1993 and a pass through of profits to investors without tax while retaining the nature of the profit (i.e., a capital gain) will continue to attract investors to the partnership format, many of whom are tax exempt. Moreover, the corporate form, once elected, cannot be discarded taxfree. Concededly, if there is to be only one limited partner, it is arguable that the relationship between the manager and the sole investor might well be structured in a form that eliminates the partnership format entirely-that is, the managers become employees of the entity which would have been the limited partner, which invests directly (or through wholly owned subsidiaries) in the portfolio opportunities.

A corporation has no death other than liquidity. Even on liquidity of a corporation, the assets (after meeting liabilities) are either distributed or nationalized, which is not viewed in case of partnerships. A corporation is perpetual in nature.

Partners of a partnership firm has personal and as well several liability as good as their firm. In a law suit, the individual partners has to defend themselves apart from their firms for suits against their firms. Whereas a corporation's MD or CEO need not personally have to defend themselves apart from, for suits against heir company. A corporation offers any public to participate them in their business as an open entity, disclose business figures in public, shares the profit to them; whereas partnership firms confine them within limited periphery and do not disclose anything about their business to public. Profit sharing pattern for both are on the basis of participating percentages.


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