Corporations versus Partnerships

Name

Instructor

Course

Date

Partnerships are business entities whereby two or more people own the organization. Partnerships take tow forms either general or limited partnerships (Shade, & Epstein, 2003). Corporations on the other hand are organizations that are completely separate from their owners. The owners of corporations are known as shareholders since they own a part or share of the organization (Shade, & Epstein, 2003). The advantages of partnerships include an increased ability of raising funds since the business is owned by more than one person. In partnerships there is a wider pool of skills, knowledge and contacts since the business is owned by different people. The management of partnerships is improved since the business is owned by more than one person. The disadvantages of partnerships include inability of a partner to transfer the interest in a business unless they get unanimous consent. Partnerships are quite unstable since they can easily be dissolved if one partner decides to withdraw from the business. In general partnerships, the partners are usually liable for how other partners act (Spadaccini, 2007).

Some of the advantages of corporations include pooling of capital from different investors and hence easy to start the business. The shareholders of corporations are not liability for any debts incurred by the organization. The disadvantages of corporations include double taxation whereby the profits are taxed when earned at corporate level and the shareholders are also taxed when the profits are distributed to them. Shareholders with a significant control of the organization have a dominant voice as compared to those who do not own a lot of stock (Shade, & Epstein, 2003).

Most large public healthcare organizations usually take the corporate business form. This is because corporations have a life of their own and can not collapse if the owners die. A corporation can theoretically exist forever as long as it continues to make profits. Since healthcare organizations have to continuously provide healthcare services, they will still be in operation even if the owners die (Spadaccini, 2007). Another reason is that capital for corporations can be easily acquired due to its permanent nature. Since healthcare organizations need a lot of funds to be set up, corporations are the best business form to take since capital to start them can be easily acquired.

References

Shade, J., & Epstein, D. (2003). Business structures in a nutshell. St. Paul, Minn.: West Group.

Bottom of Form

Spadaccini, M. (2007). Business structures. Irvine, CA: Entrepreneur Press.