Distinguish between Partnership Business and Sole-Proprietorship Business
The differences between Partnership Business and Sole-Proprietorship Business are as follows:
| Point of Difference | Partnership Business | Sole-Proprietorship Business |
|---|---|---|
| 1. Definition | A business in which two or more persons enter into an agreement to earn profit is called a partnership business. | A business established and managed by an individual is called a sole proprietorship. |
| 2. Formation | Partnership business can be formed very easily. However, it takes multiple attempts to set up and registration has to follow certain rules. | A person can form this business very easily and at low cost. |
| 3. Ownership | Multiple people own this business. Maximum number of members in banking business is 10 and in other cases 20. | Only one person owns this business. |
| 4. Capital | As the partnership business has multiple owners, the amount of capital is relatively high. | A sole proprietorship is less capital intensive. |
| 5. Management | All the partners in the business can carry on any partnership business jointly or by qualification. | The owner himself is the director and manager of the business. |
| 6. Variability | Changes in this type of business are relatively low. Because, consent of all partners is required. | In this type of business, the owner can make some changes if he wants. |
| 7. Sustainability | The sustainability of partnership business is relatively low. | A sole proprietorship is more sustainable. |
| 8. Registration | Registration of partnership business is not mandatory. But partners enjoy certain benefits when registered. | Such businesses are not required to be registered. |
| 9. Share of profit | In this business, the partners receive a share of the profits. | The owner takes the profit share in this business. |
| 10. Conflict | Conficts may arise at any time as there are multiple owners in this type of business. | There is no possibility of conflict as owner is alone in such business. |
| 11. Legal status | There are no seperate entities of this business other than partners. | This business has no separate legal entity. Business and owner are one. |
| 12. Risk | The risk of this business is unlimited. But it is jointly borne by the owners. | The risk of this business is unlimited and the owner alone bears it. |
Important Questions from this Chapter:
- Characteristics of Sole Proprietorship Business
- Characteristics of Company
- Distinguish between Partnership Business and Sole Proprietorship Business
- Features of Private limited Company
- Distinguish between Private limited Company and Public limited Company
- Disadvantages of Partnership Business
- Advantages of registration of Partnership Business
- Disadvantages of Private limited Company
- Merits of Cooperative Societies
- Steps in forming a Business
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