Definitions
Partnership: A partnership is a business arrangement where two or more persons agree to
contribute money, property, or industry to a common fund with the intention of dividing the
profits among themselves. It is not a separate legal entity from its owners [1] [2] [3] .
Corporation: A corporation is a legal entity organized under corporate law, separate from
its owners (shareholders). It aims primarily for profit and has a hierarchical structure with a
board of directors and executives managing the company [4] [5] [3] .
Cooperative: A cooperative is a business organization owned and operated by its members
who pool resources to achieve common goals, often prioritizing service and community
benefit over profit. It operates democratically, with each member having equal voting
rights [4] [5] [2] [6] .
Liability
Partnership: In a general partnership, partners have unlimited personal liability for business
debts and obligations, meaning personal assets can be used to cover business liabilities.
Limited partnerships (LP) and limited liability partnerships (LLP) provide limited liability
protection to some or all partners [3] [7] .
Corporation: Shareholders have limited liability, meaning they are only liable up to the
amount they invested in the company. Personal assets are generally protected from
corporate debts [8] [5] [3] [7] .
Cooperative: Members have limited liability, usually limited to the amount of their
membership fee or investment in the cooperative [8] [6] .
Salary and Profit Distribution
Partnership: Partners share profits and losses according to their agreement. They typically
do not receive a fixed salary but rather a share of the profits. Income is passed through to
partners and taxed on their personal tax returns [3] .
Corporation: Employees and executives receive salaries. Shareholders receive dividends
based on profits, or profits are reinvested. Corporations pay corporate income tax, and
shareholders pay taxes on dividends [5] [3] [7] .
Cooperative: Members may receive patronage dividends based on their use of the
cooperative’s services. Profits are often reinvested or distributed equitably among members
rather than as salaries [5] [6] .
Functions
Partnership: To combine resources and expertise of partners to run a business for profit.
Partners manage the business directly and share responsibilities and risks [1] [2] [3] .
Corporation: To operate a business as a separate legal entity, raise capital through stock
issuance, and maximize shareholder value. Managed by a board and executives, with
formal governance structures [4] [5] [3] .
Cooperative: To provide goods or services to members at lower costs or better terms,
focusing on community needs and democratic control by members [4] [5] [2] [6] .
Main Differences
Aspect Partnership Corporation Cooperative
Legal Entity Not separate from owners Separate legal entity Separate legal entity
Unlimited (general
Liability Limited to investment Limited to membership fee
partners), limited in LP/LLP
Ownership Owned by partners Owned by shareholders Owned by members
Decision- Partners decide as per Board of directors and Democratic, one member one
Making agreement executives vote
Profit Dividends to Equitable distribution or
Shared among partners
Distribution shareholders reinvestment
Pass-through to partners’ Corporate tax plus Pass-through or cooperative-
Taxation
personal taxes shareholder taxes specific tax rules
Purpose Profit for partners Profit maximization Service/community benefit
More complex, requires
Formation Easier, less formal Regulated by cooperative laws
incorporation
In summary, partnerships are simpler, with direct personal liability and profit sharing among
partners. Corporations provide limited liability and formal management but involve more
regulatory complexity. Cooperatives focus on member service and democratic control, with
limited liability and profit distribution aligned with member use rather than investment size [4] [8]
[5] [1] [2] [3] [6] [7] .
1. https://www.studocu.com/ph/document/la-salle-university-ozamiz/secondary-education/law-on-partne
rship-corporation-and-cooperative/20353956
2. https://thecontentauthority.com/blog/cooperative-vs-partnership
3. https://www.nerdwallet.com/article/small-business/partnership-vs-corporation-key-differences-and-ho
w-to-choose
4. https://www.scribd.com/document/525903818/Comparison-Corporation-Partnership-Cooperatives-for-
SHARING
5. https://www.upcounsel.com/difference-between-corporation-and-cooperative
6. https://www.greenpointcre.com/cooperative-vs-partnership-understanding-the-differences/
7. https://kpu.pressbooks.pub/cdntax/chapter/unknown-2/
8. https://ncbaclusa.coop/blog/differences-between-cooperatives-and-corporations/
