Corporations can be formed by one person and all owners can participate in management without jeopardizing their liability protection. An S corporation is limited to 75 owners and they cannot be corporations, nonresident aliens, general or limited partnerships, pension plans, charitable organizations or certain trusts. An S corporation cannot own more that 80 percent of the stock of other corporations and may not be part of an affiliated group. The partnership form of doing business is noted for its simplicity and ease of formation. A general partnership can be formed with nothing more than a verbal agreement.
Nothing has to be filed with the state and freedom of contract is the governing principle.
The down side is that the partners are joint and severally liable. This means that each partner is fully liable for the actions of the other partner. A limited partnership is a little better in that the limited partners are not liable for partnership debt and only their investment is at risk. The down side is that there has to be a general partner who is responsible for everything and if the limited partners get involved in management they are risking their liability protection. A limited partnership files a document with the secretary of state and is governed by a limited partnership agreement.