Question

Different between partnership and company forms of business organisation

Answer 1

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Answer 2

BASIS FOR COMPARISONPARTNERSHIP FIRMCOMPANYMeaningWhen two or more persons agree to carry on a business and share the profits & losses mutually, it is known as a Partnership firm.A company is an association of persons who invests money towards a common stock, for carrying on a business and shares the profits & losses of the business.Governing ActIndian Partnership Act, 1932Indian Companies Act, 2013How it is created?Partnership firm is created by mutual agreement between the partners.The company is created by incorporation under the Companies Act.RegistrationVoluntaryObligatoryMinimum number of personsTwoTwo in case of private company and Seven in case of public company.Maximum number of persons100 partners200 in case of a private company and a public company can have unlimited number of members.AuditNot MandatoryMandatory
Management of the concernPartners itself.DirectorsLiabilityUnlimitedLimitedContractual capacityA partnership firm cannot enter into contracts in its own nameA company can sue and be sued in its own name.Minimum capitalNo such requirement1 lakh in case of private company and 5 lakhs in case of public company.Use of word limitedNo such requirement.Must use the word 'limited' or 'private limited' as the case may be.Legal formalities in dissolution / winding upNoYesSeparate legal entityNoYesMutual agencyYesNo