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Compare and contrast the potential liability of owners

Compare & contrast the potential liability of owners of partnerships (general partners), proprietorships and corporations.

The sole proprietor has limitless liability for matters relating to the business. It means that the sole proprietor is responsible for every obligations of the business, even if those obligations exceed the overall proprietor has invested in the business.

Each of the partners in a partnership is generally liable for the activities of the partnership as a whole. Even if there are hundred partners, technically each one is responsible for all the debts of the partnership. If ninety-nine partners state personal bankruptcy, still the hundredth partner is responsible for every partnership's debts.

A corporation is a legal entity which is liable for its own activities. Stockholders, the corporation's owners, contain limited liability for the corporation's activities. They cannot lose more than the amount they paid to get the corporation’s stock.

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