Why Incorporate into a Corporation as Opposed to a Partnership?
There are both advantages and disadvantages to incorporating one’s business into a corporation or a partnership. Although other advantages and disadvantages may be present depending on the kind of business and economic conditions, here is a typical list of the advantages and disadvantages of incorporating a business into a corporation. Advantages: (1) Limited and indirect liability to shareholders One of the major differences between partnerships and corporations is that a shareholder of a corporation has limited liability from creditors of the corporation, whereas a partner in a partnership may be liable for more than his contribution to the partnership. This is true because partners in a partnership are directly liable to the creditors, whereas shareholders of a corporation are not directly liable to creditors. If assets of the partnership are insufficient to satisfy its obligations, all partners are jointly and severally liable for those obligations. Hence, a partner of a partnershi