What is the Difference between Proprietorship, Corporation and Partnership
There are many kinds of businesses, but some common terms are used for every kind of business. Generally, people use them interchangeably, but actually they are different. Here, we are discussing the difference between proprietorship, corporation and partnership.
Proprietorship
When business is owned and run by only one person, we call it as proprietorship. The owner is responsible for every kind of profit and loses and he is responsible for every responsibility. Every asset of the business is owned by owner and he is accountable for all business debts.
Corporation
This is a legal entity, which is created under the laws of the state. Corporation works as a legal entity, which has its own liabilities and privileges. There are different types of corporation; many of them are used for conducting business. Corporation holds limited liability, it means in case of failure, the shareholders will lose their investments but they will not be responsible for the debts of corporation.
Partnership
This is the form of an agreement, where two or more parties agree to cooperate to advance their mutual interests. Partnership is done not only between individuals but also between organizations.
Proprietorship vs Corporation vs Partnership
Proprietorship and partnership might be done without filling any legal document but for corporation parties have to file a document. In case of proprietorship and partnership, owners are responsible for every kind of profit, lose and debt but in corporation, shareholders are not responsible for debts. It is necessary to keep record for all the activities of a corporation, but it is not important in case of other two. Proprietorship has only one owner, while in partnership and corporation number of members may vary. All these differences suggest that proprietorship and partnership are similar but corporation follows very different rules.
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