What is the difference between a partnership and a corporation?
A partnership and a corporation are both business types in Tennessee. They each have their own legal and tax implications that must be considered. The main differences between a partnership and a corporation are in the way the business is formed, the liability of owners, and the taxation of profits. When forming a partnership in Tennessee, two or more people come together to form a business. They each have equal rights and responsibilities in the business and share profits and losses. Partners in a partnership are personally liable for all debts and obligations of the business. A corporation is a business that is formed by an individual or group of people. Those people are known as shareholders and they have limited liability for the business’s debts and obligations. This means that shareholders are not personally responsible for the business’s debts and obligations. Corporations, unlike partnerships, issue stock and have shareholders that benefit from the profits and losses. In terms of taxation, partnerships pay taxes on their profits through the individual tax returns of the partners. Corporations, on the other hand, pay taxes on their profits through the corporate tax return. In summary, a partnership is a business formed by two or more people who share equal rights and responsibilities. The partners are personally liable for all debts and obligations of the business. A corporation is a business that is formed by one or more people who are known as shareholders. They have limited liability for the business’s debts and obligations, and the corporation pays taxes on its profits.
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