Quick reference table for comparing the differences between the common kinds of legal business structures i.e. Sole Proprietorship, General Partnership, Limited Partnership, Limited Liability Partnership and a Corporation.
|Owner maintains complete control over the business.||Business owner is completely liable. His personal assets are open to risk in a legal case.||Business owner reports all income and loss on his personal income tax return.||Business terminates at the death of the business owner. The business owner can sell the business but will no longer remain the proprietor.|
|Each partner has the authority to conduct business and take business decisions according to the authority vested in him as per the partnership agreement.||Each partner is liable for all business debts.||
Each partner reports income on their personal income tax returns. The business does not pay any income tax as it does not have any legal entity.
|Unless the partnership agreement states to the contrary, the partnership usually dissolves with the death or withdrawal of any one of the partners.|
|Gen. partners control the business||Gen. partners are personally liable for all business debts and the claims. Limited partners are only liable for the amount invested.||All partners filed their share of partnership income or loss in the personal income tax return.||Death or withdrawal of a limited partner does not affect the continuity of the partnership. Results in the dissolution of the partnership death or withdrawal of a general partner unless provided for in the partnership agreement.|
|Limited Liability Partnership|
|General partners control the business And have the right to make executive decisions as provided for in the partnership agreement.||The liability of each general partner is limited to the action and decision taken by him personally and does not extend to the liability caused by the decision of another partner.||All partners filed their share of partnership income or loss in the personal income tax return.||Death or withdrawal of a limited partner does not affect the continuity of the partnership. Results in the dissolution of the partnership death or withdrawal of a general partner unless provided for in the partnership agreement.|
|The shareholders appoint a board of directors who further appoint executive officers who have the highest authority in conducting the business.||The shareholders are liable for the amount invested by them in the Corporation which is usually equal to the value of the shareholding.||The corporation pays its own taxes Under its own legal identity and the shareholders pay personal income tax on the dividend received.||A corporation can continue to exist in spite of death or withdrawal of a director, executive officer on the shareholder since it has its own legal entity.|