what ways ae companies to be distinguished from partnership
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To distinguish between a company and a partnership, you can consider the following factors:
1. Legal Structure: Companies are formed as separate legal entities, whereas partnerships are contractual relationships between two or more individuals. Companies have distinct legal rights and obligations, and their owners are not personally liable for the company's debts. On the other hand, partnerships do not have separate legal identities, and the partners are personally liable for the partnership's obligations.
2. Ownership and Control: Companies are owned by shareholders who hold shares in the company, whereas partnerships are typically owned by the partners in proportion to their contributions. In a company, the shareholders elect a board of directors to manage the company, while partnerships are managed by the partners themselves.
3. Taxation: Companies are subject to corporate income tax, and the profits distributed to shareholders are taxed again as dividends. Partnerships, on the other hand, are not taxed at the entity level. Instead, profits and losses of the partnership are "passed through" to the partners' individual tax returns, and they are taxed accordingly.
4. Continuity: Companies have a perpetual existence independent of their owners. They continue to exist even if the shareholders or directors change. Partnerships, however, are dissolved and automatically terminated when a partner leaves, dies, or a new partner joins.
When differentiating between a company and a partnership, it is important to consult reliable sources such as legal websites, business textbooks, or professional advisers to ensure accurate and up-to-date information.