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Explain the differences between a proprietorship, a partnership, and a corporation
Explain the differences between a proprietorship, a partnership, and a corporation.
Why would an entrepreneur want to choose one over the other?
Expert Solution
| Basis | Proprietorship | Partnership | Corporation |
| Commencement Process | It's easy to commence a business | It's easy to commence a business | Difficult in commencement |
| Liability | Liability of proprietor is unlimited | Liability is limited or unlimited based on formation | Liability of shareholders is limited |
| Continuity | Unstable as it fully depends on owner | Stable if the partner count is high | Stable as it is a separate legal status. |
If the entrepreneur chooses to operate as proprietorship over other forms, then he is the owner of the business and can decide on his own without anyone interventions.
If the entrepreneur chooses to operate as a partnership over other forms, then he is responsible for bearing losses only for his share in the firm. He is also entitled to get salary and interest on capital.
If the entrepreneur chooses to operate as a corporation over other forms, then there is no personal liability for him in case of the dissolution of the company, and he is entitled to receive dividends and also has the right to vote in the company's meetings.
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