Why Would I Form a Corporation Instead of a General Partnership?

There are a huge number of reasons to form a corporation instead of a general partnership. One of the only positive reasons for forming a partnership is the ease with which one can be formed. General partnerships can be formed with little or no statutory formalities. However, this one advantage is more than offset by the disadvantage of the partner’s horrendous and unlimited personal liability.

It is generally not a good idea to be a partner in a general partnership because general partners run the risk of being personally liable for the debts and liabilities of the business. Since a corporation is a separate legal entity, it is liable for its own debts and obligations. Shareholders in a properly run corporation don’t face that risk because a corporation offers limited personal liability for its shareholders.