Difference between Sole Trading Concern and Partnership Firm

GP Chudal


Difference between Sole Trading Concern and Partnership Firm

Basis of Difference Sole Trading Concern Partnership Firm
1. Formation Owned and operated by a single individual. Formed by an agreement between two or more individuals.
2. Number of Owners Single owner. Multiple owners (partners).
3. Legal Status No legal distinction between the owner and the business. Legally distinct entity from its partners.
4. Liability Unlimited liability for the owner. Partners have unlimited liability, jointly and severally.
5. Decision-Making Sole control and decision-making rests with the owner. Decision-making is shared among the partners.
6. Capital Contribution Owner contributes all the capital. Capital is contributed by all partners based on agreement.
7. Continuity Limited continuity; business continuity depends on the owner's lifespan and willingness to continue. Continuity is relatively more stable, can continue beyond the lifespan of individual partners.
8. Management Owner manages the business independently. Management responsibilities can be shared among partners.
9. Profit Sharing Owner takes all profits. Profits are shared among partners as per the agreed terms.
10. Transfer of Ownership Limited options for transferring ownership. Transfer of ownership may require the consent of partners.
11. Accountability Sole responsibility rests with the owner. Partners share responsibilities and are mutually accountable.
12. Privacy More privacy as there is no need to disclose financial information publicly. Financial information is shared among partners and may be subject to public disclosure.
13. Registration Less formalities in terms of registration and compliance. Requires formal registration and adherence to legal requirements.

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