A business entity may own property in different ways.
A sole proprietorship exists when an individual files to operate a business within the state as a single owner. The owner is personally liable for all debts and owns all assets while assuming all liabilities. The owner files one tax return and avoids double taxation.
A partnership is a business organization that files an annual tax return and is formed as a general partnership or a limited partnership. A general partnership exists with two or more individuals under a partnership agreement and creates a separate legal entity. The partners own the assets and share the profits together, but may be personally liable to satisfy creditor debts, however.
In a limited partnership there is at least one general partner and one or more limited partners. Limited partners contribute funds but do not have liabilities beyond their contribution. They do not have a right to control daily affairs of the company and in the event of a dissolution, they are liable for the amount they invested.
California follows the Uniform Partnership Act of 1994 ("UPA") and if a partner dies, his or her rights transfer to the surviving partners of the business.
A corporation has a separate legal entity from its owners or members. A corporation is viewed as a legal person and has rights as such. It may buy or sell real property, pay taxes, and bind itself to a contract. A corporation may:
sue and be sued,
buy, sell and hold assets,
obligate the corporation through contracts,
may offer shares that may be bought and sold,
shareholders may vote on the corporations operations,
the corporation may continue perpetually, and
the corporation is held responsible for any liabilities.
This article is merely informational and is not intended to be used as legal advice. Use of any information from this article is for general information only and does not represent personal legal or tax advice, either express or implied. Readers are encouraged to consult Aziz Legal, or another attorney, for any specific legal matters.