Difference Between Joint Stock Company & Partnership

A joint stock company (JSC) is a type of hybrid business entity that combines elements of a publicly traded company (corporation) and a partnership. Joint stock companies and partnerships bear some similarities, but differ greatly in taxation and government regulation.

Ownership

The owners of a JSC are called shareholders, while those of a partnership are called partners. Ownership of a JSC is represented by company shares or stock that can be sold on public stock markets. In contrast, ownership interests of a partnership cannot be transferred or sold. Partnerships may acquire new owners by consent of the current partners.

Taxation

A JSC is taxed as a corporate entity and must file independently of its owners. After the company's income is taxed, it distributes remaining profits to the shareholders in proportion to the number of stock they own. This income is taxed as self-employment tax on each shareholder's personal tax return.

In comparison, partnerships do not pay federal income taxes. Instead, the owners of a partnership simply report their share of company income on their personal tax forms.

Liability

Partnerships and JSCs offer their owners little protection from company liability. If either entity cannot meets its financial obligations, its creditors can pursue the personal assets of the partners or shareholders up to the amount of their ownership in the business.

References

• IRS: Partnerships
• US Legal: Joint Stock Company Law and Legal Definition