What is the difference between a partnership and a corporation?

Picking the right business structure is a crucial step in getting a business off the ground and running in the District of Columbia. An important choice is between partnerships and corporations. A partnership is an agreement between two or more people to carry out a business. Partnerships in the District of Columbia are regulated by the Uniform Partnership Act. In a partnership, each partner contributes money, property, or labor, and profits and losses are shared among the partners. Partners in the District of Columbia are personally liable for any debts of the partnership. Meanwhile, a corporation is a legal entity created by a group of individuals, the shareholders, and is separate from the individuals. The shareholders appoint directors, who manage the corporation. The profits and losses of the corporation are the responsibility of the corporation, not the shareholders. Additionally, the shareholders and directors of a corporation are not personally liable for the obligations of the corporation. In summary, the main difference between a partnership and a corporation is that in a partnership the partners are personally liable for debts and obligations of the partnership while in a corporation the shareholders and directors are not personally liable because the corporation is legally separate from the individuals.

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