What Are Some of the Differences Between a Partnership & a C Corporation?

A C corporation, also known as a regular corporation, is the most recognizable type of business, according to the Citizen Media Law Project. A partnership is a business that is not incorporated and involves two or more people. C corporations may have a single person as the company's owner, or an unlimited number of shareholders participating in the ownership of the business.


Owners of a C corporation have limited liability protection against business lawsuits, liabilities and other business debts. In other words, the personal assets of a C corporation owner can not be taken as compensation for the C corporation's business debts. On the other hand, partners in a partnership business have unlimited liability for business liabilities and other business debts. This means that if the business gets sued, a partner may lose their home, car and other personal assets to satisfy the partnership's obligation.

Read More: The Disadvantages of a Partnership When Compared to a Corporation


A partnership is known as a pass-through entity that allows a partner of the business to report her share of company losses and profits on her personal income tax return. A partnership business does not file a business tax return with the Intenal Revenue Service. C corporations are taxed twice on the company's profits. C corporations are required to file business tax returns, and owners of a C corporation are required to report money received from the company on their individual or joint tax returns.


A partnership business is managed by the partners of the company. Each partner may be assigned roles and responsibilities which are established by the company's partnership agreement. Owners of a C corporation do not participate in the day-to-day activities of the company. Instead, C corporations are managed by the company's directors and officers. C corporations are required to select board members, elect company officers, hold at least one annual meeting and keep records of all business activities. Partnerships are not required to select directors, hold meetings, file annual reports or create financial statements.


C corporations may have a much easier financial time in comparison to a partnership, since a C corporation has the ability to issue stock. Furthermore, C corporations may attract additional capital by taking the company public via an initial public offering. C corporations may have multiple stock classes that carry various profit and voting privileges for owners of the company. Partnerships do not have the ability to issue stock, thus limiting the company's ability to raise funds. A partnership business may be forced to rely on the personal assets of the company's partners, or on personal loans to secure financing for the business.


Partnership businesses may come to an end when the partners of the company decide to retire, or if a partner dies. However, a buy-sell agreement may contain provisions for allowing a partnership to continue to operate in the event of a partner's death or withdrawal. C corporations can last forever, without regard to who the owners of the company may be at a given period of time. This feature appeals to investors, since a C corporation will not come to an end if an owner decides to retire.

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