A company that formed will create a separate legal entity to conducting business which is protected under the Companies Act 1993 (Companies Office, 2014). When a company is formed, the company will contained some basic elements such as the companyâ€™s name which is reserved by Registrar of Companies, at least one share, one shareholder and a director, a registered office that used to keep the records of the company, an address that used to serve the legal documents of the company and the address for communication. All the companies that formed usually are categorized as the limited liability companies and the unlimited liability companies are rare.
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On the other hand, a partnership is a legal relationship formed by the agreement between two or more individuals to conducting business as the co-owners (Murray, 2015). There are three types of partnership which are the general partnership, limited partnership and limited liability partnership. General partnership is created with the general partners only that are involved in day-to-day operations of the business and assuming the personal responsibility for the liabilities of the partnership. Limited partnership is created with general partners and limited partners. For the limited partnership, the general partners are involved in the day-to-day operation of the business and also responsible to bear liabilities for the business while the limited partners are involved in the investment of the business but not involved in the day-to-day operations, so the limited partners have limited liability within the partnership. Limited liability partnership is the combinations of the characteristics of partnership and corporations where all the partners are protected from the negligence of the other partners. Differences between Corporation and Partnership The first difference between a corporation and a partnership is the structure. A company is an independent legal entity that owned by the shareholders who are responsible to determine the way of the operation of the company and decides who should manage the company. It is also a person separate from its members and its directors. Meanwhile, a partnership is not the independent legal entity which involved two or more individuals who share the ownership of a business by sharing all the management duties, expenses, liability and profits together. Furthermore, another difference between company and partnership is the liability. A company does not held individual liable for the companyâ€™s debt or legal obligations since the company is classified as a separate entity because the company itself is responsible for all debts and legal fees. This is to protect the shareholders from the risk of losing personal assets but only held liable for the actual investment of the shareholders in the company. Meanwhile, the general partners of a partnership held liable for all companyâ€™s debts and legal responsible where the personal assets of the general partners may be used to pay the companyâ€™s debts.
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