Businesses can be created and controlled under different structures and substructures.
Question: What is a Sole Proprietorship?
Answer: A sole proprietorship is normally a business that is owned and operated by one person.
It is not limited to having just one person working for the business, though, because a sole proprietorship can hire other people as employees.
Question: What is a partnership?
Answer: Usually, when a business is owned and operated by two or more individuals, it is structured as a partnership. The partnership can be a general or limited in nature.
A general partnership allows the partners to manage the company and assume responsibility for all debts and liabilities that are incurred together.
A limited partnership has both general and limited partners. The general partners own and operate the business while the limited partners take on the role of investors in the venture.
There is also a limited liability partnership (LLP) in which the partners other than the general partners file a special order with the state protecting their assets from being taken if the partnership gets into financial hardships.
Question: What is a corporation?
Answer: A corporation is a legal entity that is separate and distinct from it's owners.
Basically, a corporation takes on a life of it's own and is required to follow more stringent rules and regulations by law than a sole proprietorship or a partnership and a corporation has more tax requirements.
The biggest benefit from forming a corporation is the protection of your personal asset.
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