Formation

• Partnerships have simple structures and are easy to put in place. According to Micheal Spadaccini, a business attorney with 14 years experience, the ease of forming a partnership has resulted in many such entities being formed accidentally through oral agreements. Partnerships also exist that have written agreements, which give specific terms. For the personal holding companies, the formation is complex and requires the involvement of legal paper work, such as the filing of the Certificate of Incorporation in the state capital.
  
  

Operation

• While partnerships require a minimum of two people to start and run, personal holding companies involve more people to be fully functional. In a partnership, partners can make decisions quickly and implement them just as fast. The entity does not require annual meetings, although they are advisable. For a personal holding company, the entity has to have annual meetings. The board of directors is charged with the duty of formulating bylaws that are used to make rules.
  
  

Taxation

• A partnership is not taxed. The entity is not required to pay taxes; rather, it is required to "pass through" taxation to the partners who include it in their individual tax returns. As a partner, you get your income depending on your shares in the partnership. According to the CCH Tax Law Editors, the partnership, however, is still required to file an annual partnership return. For a personal holding company, the entity is expected to submit its regular annual tax return. On top of this, a personal holding company tax will be levied on your company if you have undistributed excess income. Excess income is money held by the personal holding company in excess of what its needs.
  
  

Liability

• Depending on the type of partnership, your personal property as a partner is not always protected from losses incurred in the partnership. Creditors have a right to recover from any of the partners' private property. However, some partnerships exist that have limited liability; where some of the partners can only incur losses on their investment in the company and not personal property. That said, there still has to be a partner who is fully liable. If you are a shareholder of a personal holding company, you benefit by being shielded from such eventualities. Creditors can only recover from the company's assets and not personal assets of shareholders.