What is the difference between a partnership and a corporation?
The main difference between a partnership and a corporation is the way they are legally structured. A partnership is a business arrangement between two or more individuals to carry on a business venture. Partnerships are not regulated by the state, so the people involved in the partnership share control, profits, and losses. Partnerships can be formed without registering with the state, however it is recommended to form a partnership agreement to outline the roles and responsibilities of each partner. A corporation is a legal entity that is established by filing with the state. Corporations are considered to be separate from the owners and shareholders and have different tax and liability rules. When forming a corporation, owners must establish a board of directors to make company decisions and approve major transactions. The board of directors is legally responsible for the actions of the corporation. Corporations are also required to have annual meetings and file annual reports with the state. In North Dakota, both partnerships and corporations are required to file for a business license and pay required taxes. Partnerships must file for an assumed name certificate if the business operates under a name other than the partners’ names. Corporations must file Articles of Incorporation with the Secretary of State in order to establish their status. Overall, the primary difference between a partnership and a corporation is the structure and legal responsibility. Partnerships are not regulated by the state and share control, profits, and losses, while corporations are legally separate from the owners and are held to higher standards of financial responsibility.
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