A corporation can become a partner in a partnership, because a corporation can do most of the same things as an individual. Corporations, like individuals, can own property and enter into contracts, both things that are necessary to become a partner in a business. Having a corporation as a partner may be advantageous under certain circumstances because corporations have more legal and financial protections for those who run them.

Things become more complicated with some business partnerships, though, such as limited liability partnerships, because it may not be possible for such a corporation to become a partner due to the legalities involved.

Corporations vs. Individuals

In most respects, corporations are much like individuals in the eyes of the law. Corporations can buy and sell property, enter into contracts, take on debt, receive profits from business transactions, and sue other parties or be sued themselves. A corporation is also taxed by the government like a person, or it can be tax exempt.

The Supreme Court has even given corporations the right to make political donations much like an individual would, although a corporation cannot vote in elections. Under state laws, corporations have very similar legal protections to individuals, allowing them to become partners in a business.

Forming a Partnership

The advantage of forming a business partnership involves combining the resources and skill sets of the members. Because a corporation may have many shareholders, this expands the resources of the business partnership. Also, if the head of a corporation decides to step down or passes away, the partnership will remain intact because the board of directors of the corporation can step into the role of leader.

There are also tax advantages to forming a partnership – a partnership doesn't pay taxes on its income but instead passes the profits and losses through to its members. The partnership then reports the profits and losses to the IRS, and each individual partner reports their share of profits and losses.

Types of Partnerships

Individuals and corporations can enter into either a general partnership or a limited partnership. Within a general partnership, partners, including corporate partners, run the business on a day-to-day basis. General partners recruit and hire employees, take out loans and spend money for the upkeep of the business. In a general partnership, all partners are equally responsible for debts, taxes and other obligations, including general corporate partners.

Limited partnerships are typically used when investors want to be passive owners of the business. The partnership is limited because the liability is limited for each partner. So, for example, if a corporation wants to invest money in a startup company, the limited partners will not be responsible for the daily responsibilities of running the business. Nor will they be responsible for all of the debts or obligations for the business, offering them more legal protection than a general partnership.

Complications of Limited Liability Partnerships

A limited liability partnership offers legal protections for its partners and allows them to be active participants in running the business. Although limited liability partnerships (LLPs) provide more legal protections for partners, they become more complicated when corporations are involved. For example, in a business where all partners must be licensed by the state to do business, such as a doctor or a lawyer, the majority of members may be required to have a license in a partner corporation. Also, state laws vary on the professions allowed to form LLPs, which may result in some states not recognizing your partnership. In dealing with limited partnerships of any kind with corporations as partners, speak with a lawyer in your state to learn the specific rules.