All partners are personally liable for everything done by any partner, the partnership or its employees. Many partnerships fail when a partner dies or becomes disabled. A partnership agreement should therefore contain provisions for how the partnership will be terminated. All profits pass directly to the partners without any business income taxes. Limited Partnerships involve at least one general partner personally liable for the company and responsible for its debts.
Limited partners are usually passive investors.
They are only liable for the amount of their investment in the business, but may receive bonuses, dividends, profit-sharing or other payments. Subchapter S Corporations allow small businesses to insulate shareholders from many corporate debts and liabilities. However, S Corporations are limited in the number and types of shareholders they may have. Profits pass directly to shareholders without any business income taxes. Subchapter C Corporations include most large, publicly held businesses.