Question

Write an e-mail to a client describing situations in which the partnership entity form might be more advantageous (or disadvantageous) than operating as a C corporation. Use subheadings and bullet points to highlight your major thoughts.

Answer 1

Explanation:

Structure and Formation of Corporation and Partnership:

• Corporation is a independent legal entity whereas partnership in which two or more partners share ownership.

• The formation of partnership entity requires fulfillment of lesser formalities than corporation.

Powers:

• A partnership entity can do anything which the partners agree to do and there is no limit to the activities.
• The powers of the shareholders are limited unlike the partnership entity.

Management:

• Every member of a partnership entity may take part in the management.

• Shareholders are not involved but managers run the company.