Difference Between Sole Proprietorship And Partnership
The main dissimilarities or difference between sole trading concern or sole proprietorship and partnership firm can be pointed out as follows:
1. Meaning
Sole Proprietorship: Form of business organization which is owned, managed, operated and controlled by an individual
Partnership: A form of business organization which is owned and operated by two or more individuals.
2. Registered Under
Sole Proprietorship: Private Firm Act
Partnership: Partnership Act
3. Members
Sole Proprietorship: Only one person is required to form sole proprietorship
Partnership: At least two or more than two people are required to establish partnership firm.
4. Name Of The Member
Sole Proprietorship: Sole Trader
Partnership: Partners
5. Capital
Sole Proprietorship: Less capital requires than partnership firm
Partnership: More capital requires than sole proprietorship
6. Decision Making
Sole Proprietorship: Sole trader can take decisions more quickly because he does not need to consult with others.
Partnership: Decision making process is slower than sole proprietorship because consent of all partners is required to take decision.
7. Secrecy
Sole Proprietorship: High level of secrecy can be maintained by the owner
Partnership: It is difficult to maintain secrecy in partnership firms.
8. Risk Sharing
Sole Proprietorship: Total risk is bore by the owner
Partnership: Risk is shared among the partners
9. Chance Of Conflict
Sole Proprietorship: No chance of conflict
Partnership: High chance of conflict and misunderstanding among the partners.
10. Raising Capital
Sole Proprietorship: It is difficult to acquire capital by an individual
Partnership: It is easy to raise capital
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11. Profit And Loss
Sole Proprietorship: Sole trader enjoys all the profits and bears all losses also.
Partnership: Profit and losses are divided and shared among the partners
12. Agreement Required
Sole Proprietorship: No agreement required to run sole proprietorship business
Partnership: Written or oral agreement is required to establish and operate partnership business.
Sole Proprietorship Vs Partnership (Comparison Chart)
I hope this post is helpful to understand the difference between sole proprietorship and partnership business and to make comparison between them.
Sole Proprietorship Vs Partnership (Comparison Chart)
Basis For Difference
|
Sole Proprietorship
|
Partnership Firm
|
Introduction
|
Business firm established, managed and controlled by a single person
|
Business firm established, managed and operated by more than two persons.
|
Registration
|
Under Private Firm Act
|
Under Partnership Act
|
Members
|
One person
|
At least two individuals
|
Member's Name
|
Sole Trader
|
Partners
|
Capital Requirement
|
Less
|
More
|
Prompt Decision
|
Yes
|
No
|
Secrecy
|
High
|
Less
|
Risk Sharing
|
No
|
Yes
|
Chance Of Conflict
|
No
|
High chance
|
Raising Capital
|
Difficult
|
Easy
|
Profit Sharing
|
No
|
Yes
|
Agreement
|
Not Required
|
Required
|
I hope this post is helpful to understand the difference between sole proprietorship and partnership business and to make comparison between them.
