What is the difference between a partnership and a corporation?

The primary difference between a partnership and a corporation is the way in which they are legally structured. A partnership is an arrangement between two or more persons or entities that agree to share the profits or losses of a business. Partnerships are generally formed through a contract called a “Partnership Agreement”. A corporation, on the other hand, is a legal entity established by law that has certain rights and liabilities. The corporation has its own legal identity separate from its owners, and is responsible for the debts and obligations of the company. The most important distinction between the two forms of business formation is how profits and losses are handled. In a partnership, the profits and losses are shared among the partners according to the terms of the Partnership Agreement. In a corporation, however, the profits and losses are the responsibility of the corporation itself, not the owners. The owners of a corporation are only responsible for the amount of money they have invested into the company. Another difference between the two structures is that a corporation generally has more protection from personal liability than a partnership. The owners of a partnership are often personally liable for debts and lawsuits, while the shareholders of a corporation are not. This protection is one of the main reasons that businesses choose to incorporate in the first place. Overall, the choice between a partnership and a corporation will depend on the individual needs of the business owners. In Michigan, business formation law provides guidance on which structure may be best suited for the particular business.

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What is the difference between a partnership and a corporation?

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