What is the difference between a partnership and a corporation?

The difference between a partnership and a corporation is an important factor when it comes to business formation law in New Mexico. A partnership is a business arrangement between two or more individuals who agree to run a business and share the profits. All partners are responsible for all of the company’s debts and liabilities. A corporation is a separate and distinct legal entity that is created through the filing of documents with the New Mexico Secretary of State. It is owned by its shareholders and managed by its board of directors. The board of directors makes all of the major decisions for the corporation such as hiring and firing employees, issuing dividends, and entering into contracts. Additionally, partnerships are typically not taxed as a separate entity, and profits are passed through to the individuals who formed the partnership, whereas corporations are taxed as a separate entity, separate from individual shareholders. Another key difference between the two business forms is that, in most states, corporations are required to follow certain formalities such as annual filings, whereas partnerships do not have as many formalities. Finally, partnerships typically provide partners with limited personal liability, while corporations provide shareholders with liability protection.

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What is the difference between a partnership and a corporation?

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