Partnership & Corporation Law

Partnership and corporation law are the backbone of the economy.

If you are in business, unless you are a sole proprietor, partnership and corporation law affect you. If you have a business partner, even if you do not sign a partnership agreement, you are in a partnership under the law of the state where you operate.

Sources

Partnership and corporation law is primarily state law and will vary from state to state. Delaware, for example, has a particularly well-developed body of corporate law and sophisticated business courts, which is why so many companies incorporate there. Although court decisions, collectively called the "common law," are an important source of both partnership and corporation law, every state has statutes establishing fundamental principles of both partnership and corporation law.

Taxes

Partnerships and corporations differ in important ways with regard to taxation. Federal income tax law is a significant consideration in choosing to do business as a partnership or corporation.

Liabilities

Partnerships and corporations also differ in their protection of the business owners from liability for the business debts. Corporations generally shield shareholders from liability for the debts of the business. General partnerships do not. Limited partnerships, which require written documentation, generally shield the limited partners from liability beyond their investment in the company.

References

• Cornell University Law School: Uniform Limited Partnership Act
• Cornell University Law School: Uniform Partnership Act
• State of Delaware: Delaware Corporation and Business Entity Laws

Resources

• Internal Revenue Service: Business Structures
• University of Washington School of Law: Corporations and Business Organizations Legal Research Guide