In a partnership, the finances that have to be raised are usually raised by the partners themselves in collaboration with their contacts. They can seek out business and bank loans when in need of funds; however banks and financial intuitions usually are critical and wary of disbursing loans to partnerships due to their volatile nature. Organization wise partnerships revolve around the two partners who are the owners of the business (Homes & Zimmer, 1998). They have specific profit sharing ratios established in the partnership agreement which is usually set on the basis of their involvement in the business, and the amount of investment they make in the partnership.
A corporation is a company which is a separate entity from its owners. In case of a company there can be multiple owners who have a share in the profits of the company. These owners are referred to as the shareholders of the company. In a corporation the owners of the company are not necessarily involves in the management and running of the company.
“When a company is incorporated, it acquires all of the powers of an individual, an independent existence – separate and distinct from its shareholders, and an unlimited life expectancy. In other words, the act of Incorporation gives life to a legal entity known as the corporation, commonly referred to as a company. A company can acquire assets, go into debt, enter into contracts, sue or be sued. Ownership interests in a corporation are usually easily changed. Shares may be transferred without affecting the corporation’s existence or continued operation.” (‘Proprietor/ Partnership vs. Incorporation’)