Partnership vs. Corporation

Compare and contrast the advantages and disadvantages inherent in electing to become a partnership and a corporation. Indicate key aspects in which the resulting choice is likely to impact tax obligations.

Partnerships and Corporations are different in many ways, and depending on how you want your company structured will make the different on which option you will choose to set up your company. Partnerships are usually easier to setup than corporations because owners simply split any profits or losses, and file these adjustments on their personal taxes. Corporations have to file separately because a corporation is a separate entity and it is based on the shares the company possesses.

There are three major forms of business ownership and they are as follows: Sole Proprietorship, Partnership, and Corporation. A sole proprietorship is a business that is owned, and usually managed by one person; it is the most common form. A partnership is a legal form of business with two or more owners. A corporation is a legal entity with authority to act and have liability separate from its owners. I would have to say that a partnership and a corporation have their advantages and disadvantages; in example, a partnership has a few different types of partnership. One example is the Limited Partnership. This is a partnership in which all owners share in operating the business and assuming the liability for the business’ debts. Secondly, we have the Limited partnership, and it’s a partnership with one or more general partners and one or more limited partners. Finally, we have the Master Limited partnership; this partnership looks much like a corporation because it acts like a corporation and is traded on a stock exchange, but is taxed like a partnership and avoids those corporate income taxes. A partnership has an advantage because all the profits of partners are taxed as personal income to the owners; in addition, two or more people pool their money and credit.

A common...