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Features Sole Partnership Corporation

Proprietorship
I. Similarities / /
i. Has a juridical / /
personality
separate and
distinct from
that of the
individuals
composing it
ii. Can act only Acts through the / /
through agents sole proprietor
himself/herself (the
proprietor and his
business is
considered as one
entity)
iii. An organization / /
composed of an
aggregate of
individuals
iv. Distributes its / / /
profits to those (single
who contribute individual/owner
capital collects all its
profits)
v. Can be / /
organized only
where there is a
law authorizing
its organization
vi. A taxable The proprietor and / /
corporation, his business is
subject to considered as one
income tax entity and is also
considered as one
taxpayer and
therefore forms
part of the owner’s
income tax
II. Differences
i. Manner of Dependent on the Mere agreement of By law or by
Creation will of one person the parties operation of law
ii. Number of Organized by only May be organized Requires at least
Incorporators one individual by only two persons five incorporators
(except a
corporation sole)
iii. Commencement Does not possess a Acquires juridical Begins to have
of juridical juridical personality from the corporate existence
personality personality moment of the and juridical

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separate and execution of the personality only

distinct from the contract of from the date of the
personality of the partnership issuance of the
owner of the certificate of
enterprise incorporation by the
SEC under its
official seal
iv. Powers May exercise any May exercise any Can exercise only
power the he/she, power authorized by the powers
the sole proprietor, the partners expressly granted
wills as long as it is provided it is not by law or implied
not contrary to law, contrary to law, from those granted
morals, good morals, good or incident to its
customs, public customs, public existence
order, or public order, or public
policy policy
v. Management Managed by the When the The power to do
sole proprietor management is not business and
agreed upon, every manage its affairs is
partner is an agent vested in the board
of the partnership of directors or
trustees
vi. Effect of No effect as there A partner as such The suit against a
mismanagement is only one party can sue a co-partner member of the
involved which is who mismanages board of directors or
the sole proprietor trustees who
who is also the mismanages must
owner and the be in the name of
manager the corporation
vii. Right of No right of No right of Has such right
succession succession succession
viii. Extent of Has unlimited The partners (except The stockholders
liability to third liability—the limited partners) are are liable only to the
person company’s liable personally extent of their
liabilities are also and subsidiarily investments as
the sole (sometimes represented by the
proprietor’s solidarily) for shares subscribed
personal partnership debts to by them
obligations third persons
ix. Transferability Cannot transfer its A partner cannot In a stock
of interest interest as the transfer his interest corporation, a
proprietor and his in the partnership so stockholder has the
business is as to make the right to transfer his
considered as one transferee a partner shares without the
entity without the consent prior consent of the
of all the other other stockholders
existing partners because a
because the corporation is not
partnership is based based on the same

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on the principle of principle as a

deletus personarum partnership does
x. Term of Dependent on the May be established May not be formed
existence will or life of the for any period of for a term in excess
owner time stipulated by of 50 years
the partners extendible to not
more than 50 years
in any one instance
xi. Firm name Can operate under A limited May adopt any firm
the name of its partnership is name provided it is
owner or it can do required by law to not identical or
business under a add the word “Ltd.” deceptively similar
fictitious name to its name to any registered
firm name, or
contrary to existing
laws
xii. Dissolution May be dissolved May be dissolved at Can only be
voluntarily(by will any time by the will dissolved with the
of the owner) or of any or all of the consent of the State
involuntarily partners
(when the
government or a
court has ordered
to cancel the
business
registration of a
business due to
non-compliance
with the
regulations, death
of the owner, or the
incapacity of the
owner to do
business)
xiii. Laws which Governed by the Governed by the Governed by the
govern Civil Code Civil Code Corporation Code

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