Difference between Sole Trading Concern and Partnership Firm
Basis of Difference
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Sole Trading Concern
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Partnership Firm
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Formation
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Formed at the will of the owner.
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Formed with a mutual agreement (oral or written) among the partners.
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Management and control
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Managed and controlled solely by the owner.
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Management and control of ownership are shared by the partners.
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Sharing of profits and losses
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Profits and losses belong to the owner.
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Profits and losses are shared among the partners in a pre-decided ratio.
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Number of members
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Only one member (owner) runs it.
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Minimum-2, Maximum (in case of a banking business)- 10, Maximum (in case of ordinary business)- 20.
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Governance
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There is no regulating act to govern it.
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It is governed by the Indian Partnership Act 1932.
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Decision making
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Decision making is rapid, as all the decisions are taken by the sole proprietor.
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Decision making is relatively delayed, as it requires the consent of all partners.
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