How does a corporation differ from a sole proprietorship or partnership?
A corporation differs from a sole proprietorship or a partnership in that it is a legal entity, regarded much like an individual, and it is owned by individual stockholders, each of whom faces limited liability for the firm's debts.
Corporation is an organization, legal entity, in which there multiple people that are owners of that corporation. In a corporation, many people own part of the corporation i.e. have stocks (or shares) that represent ownership of the corporation thus making them shareholders. Each stock represents certain percentage that an individual owns. This percentage can come in the equal share – meaning that every person owns equal part of the company or that each person has unequal part of the company (one has 5%, other 2%, some may one 20%, etc.). Every shareholder has liability, is responsible, for the debts and liability of the corporation in the amount of their share. A corporation differs from sole proprietorship because a corporation is a legal entity which is separate from the owners. When a corporation goes bankrupt, the owners of the share only lose in the amount of their shares which means they have limited liability while in sole proprietorship owner has unlimited liability.