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Wednesday, 9 March 2011

Difference or Distinguish between Sole Proprietorship or Sole Tradership and Partnership

1. Formation:-
Sole Proprietorship : It is easy ti form and simple to run. There is no legal formalities for the commencement of this type of business.

Partnership: Partnership deed and such other legal documents are necessary for formation of partnership.

2. Number:-
Sole Proprietorship : In sole tradership there is no concept of more than one person. Business is owned by one person only.

Partnership: There are at least two persons in each type partnership but no more than twenty in ordinary business and ten in banking.

3. Contract:-
Sole Proprietorship : There is no concept of any contract due to one man.

Partnership: It is created by contract. Agreement is most important element for partnership. No contract , no partnership.

4. Capital Volume:-
Sole Proprietorship : As one man invest his amount into his business, capital volume remains limited.

Partnership: Capital is contributed by two, or more than two partners. Therefore capital volume may be increased by admitting new partners.

5. Personal Presence:-
Sole Proprietorship : Its management was to conducted by one man only. Therefore personal presence is compulsory.

Partnership: This kind of business may be conducted by one or two partners only.Therefore personal preference for each partner is not necessary.

6. Profit and Loss:-
Sole Proprietorship : One man enjoys hundred percent profit of the business if there is loss he has to sustain all the losses.

Partnership: Profit and loss are distributed among all the partners of the firm. In case of loss each partner may not feel heavy burden.

7. Transferring Right:-
Sole Proprietorship : Sole proprietor may easily transfer his business without the consent of another person.

Partnership: One partner cannot dispose off or transfer his business without the consent of all other partners.

8. Decision:-
Sole Proprietorship : One man is supreme authority of his business. Therefore he may take any action against any matter promptly.

Partnership: All the matters are decided by the mutual consultation. Therefore matters may not be disposed off promptly.

9. Accountability:-
Sole Proprietorship : As all business is owned by one person he has not be obey any order. So there is no fear of being accountable to any one.

Partnership: As partners are accountable to one another, they have to keep up-to-date record and correct information in connection with their business.

10. Expansion of Business:-
Sole Proprietorship : There are limited chances for the growth of business due to lack of capital and managerial abilities.

Partnership: There are more chances to expand the business volume due to large number of partners.

11. Stability:-
Sole Proprietorship : There is no possibility of distribution due to one man.So this type of business may be run smoothly.

Partnership: There is always risk of dissolution due to misunderstanding and friction among the partners.

12. Secrecy:-
Sole Proprietorship : Secrecy may be maintained in this form of organization on accounts of on man supervision.

Partnership: As every partners know about the the internal affairs of the business so there are great chances of leakage of the secrecy.

13. Abilities:-
Sole Proprietorship : One man cannot possess all types of technical and administrative abilities.

Partnership: As there are number of partners so firm may enjoy the combined abilities of several heads.

14. Organization Expenditure:-
Sole Proprietorship : There are minimum expenses to organize and operate this form of organization.

Partnership: Partners have to pay legal fees, registration fees and other expenses. Therefore it is costly organization comparatively.

15. Dissolution:-
Sole Proprietorship : This kind of business may be dissolved easily without any legal formalities.

Partnership: Partnership may not be dissolved without fulfillment of legal requirement.

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