Final answer:
A partnership is a business structure where two or more persons own and manage a company, sharing responsibilities and profits. Sole proprietorships are individual-owned, whereas corporations involve larger, sometimes publicly traded, entities. Partnerships offer a middle ground with multiple owners sharing control and financial interest without forming a corporation.
Step-by-step explanation:
A partnership is an unincorporated retail firm owned by two or more persons, each with a financial interest. When individuals come together to start a business and share in the responsibility and profits, it forms a partnership. New businesses might be organized as sole proprietorships or corporations, but when a group comes together, the business is best described as a partnership. Unlike sole proprietorships, which are run by an individual, and corporations, which are larger and often have publicly issued stock, a partnership allows multiple stakeholders to share ownership and managerial duties without forming a corporate entity.
As an example, while a small law firm run by one individual constitutes a sole proprietorship, a larger firm owned and managed by a group of lawyers represents a partnership. Although many private companies are small, there are also large privately held companies that could be structured as partnerships or corporations, such as Cargill, Mars, and Bechtel, which have significant annual sales but no publicly issued stock.