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What is the difference in ownership between a sole proprietership, a partnership, and a corporation?

What is the difference in ownership between a sole proprietership, a partnership, and a corporation?

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Expert Solution

Business owners have several options from which to choose when selecting a structure for their business.

A sole proprietorship is an unincorporated entity that does not exist apart from its sole owner. Sole proprietorship is the simplest business form and is not a legal entity. Sole proprietorship is the easiest type of business to establish which means that there’s no state filing required. It is simply an enterprise owned and operated by an individual.

A partnership is two or more people agreeing to operate a business for profit. By default, a business that begins with a verbal agreement or handshake is considered a general partnership. All partners share in both the day-to-day management and business profits.

A corporation is a legal entity -- a "person" in the eyes of the law -- existing separate and apart from its owners. A corporation is the most common business structure. A corporation is an independent legal entity owned by its shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.


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