Final answer:
Corporations differ from proprietorships and partnerships in legal status, liability, continuity of existence, raising capital, ownership transfer, and management structure.
Step-by-step explanation:
Key Differences Between Corporations and Proprietorships/Partnerships
Corporations differ from proprietorships and partnerships in several key ways. The following list highlights six main differences:
Legal Status: Corporations are separate legal entities, unlike proprietorships and partnerships that are not legally distinct from their owners.
Limited Liability: Shareholders of a corporation have limited liability, meaning they are not personally responsible for the company's debts, contrasting with proprietorship and partnership owners who bear unlimited liability.
Continuity of Existence: Corporations continue to exist independently of the ownership status, whereas proprietorships and partnerships may cease to exist if an owner departs or passes away.
Raising Capital: A corporation can raise capital by selling shares publicly, a feature not available to proprietorships or partnerships.
Ownership Transfer: Ownership in a corporation can be transferred through the sale of shares, which is less straightforward in proprietorships and partnerships.
Management Structure: Corporations have a formal management structure with a board of directors and officers, whereas proprietorships and partnerships have a more informal management often managed directly by the owners.
These differences underscore the unique characteristics of a corporation as compared to other business forms, such as sole proprietorships and partnerships, particularly in terms of legal status, liability, existence, capital, ownership, and management.