Business Law: Comparative Analysis of Corporation and Partnership

This essay provides a comparative analysis of partnership and corporation business structures under business law, highlighting the advantages and disadvantages of each. It emphasizes that while partnerships involve shared ownership, management, and profits among partners, corporations are independent legal entities owned by shareholders. The essay argues that forming a corporation is generally better due to the limited liability it offers to shareholders, protecting their personal assets from business debts and legal obligations. Although partnerships may have simpler tax structures, corporations often benefit from lower corporate tax rates, making them a more financially sound choice despite the initial complexities and expenses.

Running head: BUSINESS LAW
Business Law
Name of the Student
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Author Note

1BUSINESS LAW
Deciding the form of business one is going to register into before starting transactions
is important. A partnership business involves two or more persons who share the ownership
as well as the prophets that are derived from the business. In partnership all the managerial
duties expenses liabilities and profits are shared between the two or more partners. However,
in case of corporation it is an independent legal entity which is owned by the shareholders
and it is the shareholders who take the decision on the management and administration of the
company (Burns 2016).
Although a corporation involves more expense and complication them a partnership
firm yet it is more advisable than a partnership firm, as it does not hold the individual
shareholders liable for the companies legal obligations or debt. A company is a separate legal
entity and therefore it is held responsible for its own dates and fees. Therefore, the
shareholders do not face the risk of losing their personal assets. In a partnership firm, the
partners are always held liable for the deaths and legal obligations of the partnership firm and
the assets of the partners are often involved to pay the debt of the firm. There is a risk of
being bankrupt easily in case of a partnership, as the personal assets of the partners are taken
into consideration for paying the debts of the firm (Miller and Jentz 2017). Although in a
partnership business, the firm does not need to pay separate government taxes according to
the U.S. Small Business Administration. The taxes are collected through the individual
partners by way of their individual taxes. However, in case of a corporation, the corporate tax
rate is much lesser then the individual income tax rate that the partners pay in case of
partnership form of business.
Therefore, forming a corporation is better than forming a partnership business.

2BUSINESS LAW
References
Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
Miller, R.L. and Jentz, G.A., 2017. Business law today: The essentials. Cengage learning.