Ownership and Control: Partnership vs. Corporation

One of the reasons why general partnerships can work out so well is because there is unity of ownership and control. The same people that are making management decisions about the partnership are the same people that own it. This does not guarantee that everything will work out well, but it at least means that the self-interest of the owners and managers is one and the same. This natural unity of ownership and control can be broken through a partnership agreement that grants one partner extra-managerial rights to control of the partnership, but the default state is one of unity between ownership and control. If there are two partners putting up $50,000 into a partnership that is capitalized with $100,000, each partner has an equal say in the management of the partnership and an equal claim on the profits and losses. This can be modified through a partnership agreement.

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