Robbi Gunter is a staff writer for Strong Business Credit, a website that helps small business owners launch or expand, and small businesses with no credit or bad credit obtain business-based loans.
The main differences between partnerships/sole-proprietorships and incorporation is in the liability the business owner(s) assume on behalf of the business.
In a sole-proprietorship, there is only one business owner who may also be the only employee of the business. Without incorporating a small business, the business owner assumes all liability for the business, should anything go wrong. The business owner takes responsibility for all debts and legal matters, including compensation for accidents and wrongdoings. If the business owner is successfully sued and does not possess the liquid assets to pay the plaintiff, the business owner's personal property, including his or her home, car and possessions may be seized to meet the costs. Being sued as a sole-proprietorship is, in essence, exactly the same as being sued yourself, as a private individual. In addition, the business owner does not pay corporate taxes, only personal income taxes on profits made.
In a general partnership (there are other forms of partnerships that reduce liability), the business owners assume the same liability as the sole-proprietor, however it is more risky for each individual involved, as you may be held responsible for the actions of your partner(s). For example, if your business partner takes on several business loans and fails to pay them back, you may be held responsible for his or her actions if he or she is unable to be held responsible for them. Other than the shared liability, the differences between a general partnership and a corporation are very similar, in that your personal assets and property can be used to settle your debts or to pay the plaintiff if you are successfully sued.
But most importantly, in order to be incorporated, one must file paperwork with state and federal agencies, registering your corporation. This paperwork is known as "Articles of Incorporation." Without filing them, your small business is not incorporated and you will not be recognized as such in any cases of taxation or liability.
- Related Videos
- Related Articles
- Ask / Related Q&A
- What A Sole Proprietorship Business Structure Entails
- Liability in a Partnership or a Sole-proprietorship
- Is Your Llc a Sole Proprietorship, a Partnership, a C Corporation or an S Corporation?
- Why a Partnership is Twice as Dangerous as a Sole Proprietorship
- Advantages Of Sole Proprietorship
- Some Pros And Cons Of Sole Proprietorship
- Guide to Sole Proprietorships
- Five Reasons to Use a Sole Proprietorship
Your Financial Freedom Is Only a Call Away
By: arun | 30/12/2009All of us desire to attain financial freedom because it is the greatest source of happiness that you can ever come by. But, there is more you would need to know about including the fact that with a simple phone call you would be able to discover the right path to this success.
The Right Knowledge for Wealth Creation Success
By: arun | 30/12/2009There are some aspects of wealth creation course that you need to take a closer look at. They are the key that you would need to be able to get the kind of wealth and success in life as you have always dreamt. You would use these to guide you to be able to find the right program that would not work against you but would give you the kind of ideas that would help you succeed.
End Your Get Rich Quick Scam Anxiety
By: arun | 30/12/2009As an internet user, you may have come across several advertisements of e-books and programs that would help one get rich quick. However, the truth of the matter is that most of those programs are scam and would only rob you off your hard earned money. It is not possible to get rich overnight.
Korean Translator: Benefits of Localization in the Global Scenario
By: Adolphpaul | 30/12/2009A Korean translator is essential for any business that needs to communicate effectively with people who only understand Korean. Almost 78 million people speak this language across North Korea, South Korea and parts of China. To enter into the native market, products and services need to be localized. Language translation is one of the most effective ways of localization to generate favorable sales.
Salehoo Tips For Online Sellers- Product Advertising
By: Anand Renganathan | 30/12/2009Today businessmen all over the world have understood the need for advertising their products.
Home Appliances Posters for the Imaginative You!
By: Anirban Bhattacharya | 30/12/2009Who doesn’t want to bring that special charm to his/her home by ornamenting it with some of the beautiful items and artifacts available? One easy and inspiring way to do so is to adorn the walls of one’s home with posters from the past. Falling under the vintage poster category, such a poster can be stimulating enough to tickle the imaginative insight in us.
Increase Income - 3 Creative Calendars for Planning a Profitable 2010
By: Bonita L Richter | 30/12/2009The secret to making your income grow by leaps and bounds is to have a simple system in place that organizes your list-building, marketing, and promotional activities. The problem many entrepreneurs experience is managing all these activities quickly becomes overwhelming. Read about how to create three easy-to-use calendaring systems.
International Caravan Partners Up WIth CSN Stores in 2010 to Bring You the Absolute Best Unique Line of Home Decor
By: Ali Shaban | 30/12/2009International Caravan and Designs by Blazing Needles is proud to announce that all of their newest line of indoor and outdoor furniture will now be able to be seen and purchased at all participating CSN Store Websites. That's right, with the help of Alicia Kaper of CSN Stores and Vice President...
How To Get Business Credit Lines When Your Personal Credit Sucks
By: Robbi Gunter | 16/05/2009 | EntrepreneurshipHave you been rejected by the bank for a business loan because of your bad credit history? It’s not as tough as you think to get business lines of credit if you are willing to take the right steps.
Diamonds Are A Cereal Marketer’s Best Friend
By: Robbi Gunter | 14/05/2009 | EntrepreneurshipWhen C.W. Post started a small business in 1895 with his first batch of “Postum” (breakfast cereal) he probably did not foresee his company getting into the diamond business.
Starbucks Used To Be A Small Business
By: Robbi Gunter | 11/04/2009 | EntrepreneurshipWhen our forefathers arrived on this continent they brought with them a vision of a new world with thriving commerce and raucous marketplaces. No matter what the media may be pushing on us about the economy, the vision of our predecessors is just as alive today as it was a couple centuries ago. If you don’t believe it, then kick yourself next time you’re standing in line at Starbuck’s waiting to pay $4 for a cup of coffee.
Get To Your Hot Leads Right Now
By: Robbi Gunter | 19/03/2009 | EntrepreneurshipPresumably if you are persistently working at building your business credit score and your business loan application, you are looking for ways to improve how you find paying customers sooner than later.
California Kid Makes $9800 With Overnight Internet Launch
By: Robbi Gunter | 18/03/2009 | Internet MarketingThe next morning the CK opened up his email account and freaked. The membership had sold out and he had a waiting list of 400 people. $9,800 was sitting in his online account.
Don't Be Daft. Sell A Product That People Want
By: Robbi Gunter | 18/03/2009 | Small BusinessAnyone can start a successful small business in a challenging economy provided you are willing to "think outside the box" and find a niche that excites your target market. While some businesses are going under, others are thriving.
Mario Andretti and Entrepreneurs
By: Robbi Gunter | 28/08/2008 | EntrepreneurshipYou may wonder what the legendary race car driver, Mario Andretti has to do with starting or expanding a small business. A great deal actually.