How ownership can be transferred by sale, gift, dissolution or death Sole Proprietorships are businesses owned and operated by a single person - the simplest form of organization. The proprietor is responsible for all business debts and liable for any actions by the company or its employees. Profits pass directly to the owner without any business income taxes. Partnerships involve two or more partners who agree to share equally in all profits and losses. 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.