How do sole proprietorships, partnership and corporation differ?​

Sole proprietorships, partnerships, and corporations are three different types of business structures. <br /><br />1. Sole Proprietorship: In this structure, there is only one owner known as a sole proprietor, who takes absolute charge of all the decisions. The proprietor has unlimited liability, which means they are personally responsible for all the business's debts.<br /><br />2. Partnership: This involves two or more people who pool their resources to run the business. They share both the profits and losses, and also have joint decision-making authority. Each partner is personally liable for the partnership's debts, which indicates unlimited liability.<br /><br />3. Corporation: This is a distinct entity from its shareholders and is legally considered a 'person'. Therefore, it has its own rights, privileges, and liabilities, apart from those of its shareholders. Its key feature is limited liability, which means that shareholders are only liable for the amount they've invested.<br /><br />An important concept used in these structures is of liability. In a sole proprietorship and partnership, owners have unlimited liability, i.e., personal assets may be utilized to pay off business debts. Whereas, shareholders in a corporation have limited liability, which means their personal assets are not at risk if the corporation faces any debts.<br /><br />We differentiate these structures based on the number of owners, who holds the decision-making authority, and the extent of the owner's liability to the business's debts. Each type of structure has its advantages and drawbacks, depending on the business's requirements and goals.