|
|
| *Ostroff, Fair and Company>>>Corporations |
What is the difference between corporations, sole partnership, parnership etc in business? |
What is the difference between corporations, sole partnership, parnership etc in business? A corporation has a seprate identitly for themselves and receives legal rights and duties. A Sole Proprietorship (Partnership) has NO seperate existence from its owner. It has only ONE owner. A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested. Hope it helps a sole proprietorship is a business with only one owner. a partnership has two owners. a corporation has several owners -- usually they have five. A corporation, in general, has many owners with no say in the day to day operation, limited liability for the owners and higher taxes than the other 2. A partnership, in general, has a few owners, operating or silent, tax advantages vs a corp and usually more liability for the owners (ex. limited partners). A sole proprietorship has one owner, tax advantages, unlimited liability for the owner but less paperwork. See a business law or accounting textbook for more details. Consult a business attorney or CPA if you want to set up a business and want the best form of ownership for you. Good Luck! The major differences between these forms of business organization relate to the legal liability of the owners, and how each one is taxed. A corporation is a legal entity owned by one or more shareholders. Shareholders generally have no liability for the activities of the corporation (this is called "limited liability"). The corporation is managed by Directors and Officers (who do face a certain amount of liablity for corporation's actions, and therefore often purchase insurance). Regarding taxes, a corporation may incur "double taxation" on its income: First the corporation pays tax on its profits. Then, when it distributes the profits to the shareholders (in the form of dividends), the shareholders have to pay taxes on the dividends. Basically, the same income gets taxed twice. You can avoid this by making the corporation an "S corporation", which means the corporation does not pay any federal income tax itself -- rather the shareholders pay tax on their share of the corporation's profits. This is available only for corporations with few shareholders. A "sole partnership" does not really exist. You probably mean sole proprietorship. This is when someone runs their business without the protection of a corporation, partnership or limited liability company (LLC) or any other legal entity that protects the owners from being liable for the business. A "partnership" is a legal entity that provides the same tax advantags as "S corporation" - the partnership does not pay any income tax. Partnerships come in 2 basic forms: A "general partnership" is a form of business where each partner is liable for the other partner's activities relating to the business. This is obviously not a very good option, since limited liability is one of the main advantages of forming a business entity. A "limited partnership" is where the partners have "limited liability" similar to a corporation. A different form of organization is the LLC - this gives you the same "limited liability" as a corporation or limited partnership, and gives you the same tax benefits as a "S corporation" or partnership. |
| Tags |
| Insurance Credit Corporations Other - Careers & Employment Technology Marketing & Sales Law & Legal |
Finance Categories--Copyright/IP Policy--Contact Webmaster |