Likewise, more labor, more insight and greater efficiency (through economy of scale) may exist
with the partnership, than with the sole proprietorship.
The burden of raising the necessary
capital and the labor/services to be produced is alleviated by the number of persons available
(partners) that conduct the business.
Obviously, all of these advantages are presumed.
possible that all, some or none of these advantages (over a sole proprietorship) may materialize
in a particular partnership.
In comparison to the corporation, the partnership offers a smaller decision-making unit along
with the potential to participate in a greater percentage of profit (fewer investors participate in
contributing capital in a typical partnership compared to the typical corporation).
state's administrative burdens required for the corporation are very much more involved than that
of the partnership.
Finally, taxation issues usually make partnerships preferable to the corporate
entity inasmuch as the partnership does not bear the burden of dual taxation that occurs with the
Corporations are the largest and most complicated of all of the business entities.
is a legal fiction that allows a group of investors (perhaps thousands, or millions) to partake of a
business interest of a single entity (the corporation).
The two greatest advantages that the
corporation holds over the sole proprietorship and partnership lies with the limited liability of
corporate stock ownership as well as the potential to have vast numbers of investors, creating
huge investments of capital and labor.
In fact, it is certain that many business undertakings have
capital requirements so large that it would be impossible otherwise to amass the necessary
monies and resources to initiate such businesses, especially with regard to the modern multi-
national corporation, where business interests and concerns may exist in any portion of the
Liability limitations are a fundamental advantage with the corporation. The limited liability of
the individual investor is identical to the stock share holdings.
Individual investors risk only
their investment made toward the purchase of their stock holdings, no more.
In exchange, stock
holders relinquish the day to day control of the business to the corporation's officers (who are
chosen by the board of directors).
The board of directors are chosen by the shareholders, so
individual shareholders have only indirect influence over the day to day operations of the
This lack of direct influence is a major disadvantage to the individual stockholder,