Distinguish between Sole Trading Concern and Partnership-HSC,Class 12,OC/OCM

Differences between Sole Proprietorship and Partnership are as follows-

Sole Trading Concern v/s Partnership 

1. No of owners-

In case of a sole trading concern, there is only one owner. 

A partnership has a minimum of 2 owners. As per new Companies Act 2013, a partnership can have maximum 100 partners 

2. Agreement-

In case of a sole trading concern, there is no agreement as there is only one owner.

In case of a partnership, an agreement is necessary. However, the agreement may or may not be in writing. In other words, even an oral agreement will do.

3. Division of Profits/Losses-

In case of a sole proprietorship, since there is only one owner, there is no division of profits/losses.

In case of a partnership, partners share profits and losses.

4. Ownership and Control-

Since sole proprietorship has only one owner, the ownership and control lie in the hands of only one person.

In partnership, ownership and control do not lie in the hands of only one person (as there are multiple owners).

5. Co-ordination-

In case of sole trading concern, as there is only one decision maker, there is no problem of coordination.

This is not the case with a partnership. In case of a partnership, it is important to have a good coordination among the partners

6. Secrecy-

Since sole trading concern has only one owner, there is a high level of business secrecy (as he is not obliged to share his business secrets with anyone).

Comparatively, the level of secrecy is low in case of partnership as there are multiple owners.

7. Continuity of Business-

In case of a sole trading concern, the life of the business depends on life on only one person (i.e., sole trader/proprietor).

But in case of partnership firm, there is greater continuity due to the existence of multiple owners.

Related Posts - Joint Stock Company - Meaning and Types