distinguish between sole proprietorship and partnership
Answers
♣ Sole Proprietorship
1. Sole Proprietorship is managed & controlled by only one person so there cannot be more than one person in this form of Business organisation.
2. Resources available are limited because only one person is involved.
3. It is managed by one person only who can easily maintain secrecy.
4. Quick decision- making is possible because sole proprietor does not consult any other person.
5. The sole proprietor has to bear all the risk of firm himself.
6. In sole proprietorship form of business organisation, one person has the sole claim on profits.
♠ Partnership
1. In this form of business organisation, two or more persons who have agreed to carry on some business jointly. In partnership, at least two persons are required. Maximum number of members may be 100.
2. In partnership, more capital, resources, management skills, specialisation, etc. are available because it is managed by two or more persons.
3. As there are two or more partners, it is very difficult to maintain secrecy.
4. Delay in decision-making because all the important decisions regarding business matters are taken after the consent of all the partners.
5. Every partner is individually as well as jointly liable for all the risk of a partnership.
6. In partnership form of Business organisation, profits & losses are shared amoung partners in pre-determined ratio.
Distinction Between Sole Proprietorship and partnership.
Sole Proprietorship
1. Sole Proprietorship is managed & controlled by only one person so there cannot be more than one person in this form of Business organisation.
2. Resources available are limited because only one person is involved.
3. It is managed by one person only who can easily maintain secrecy.
4. Quick decision- making is possible because sole proprietor does not consult any other person.
5. The sole proprietor has to bear all the risk of firm himself.
6. In sole proprietorship form of business organisation, one person has the sole claim on profits.
Partnership
1. In this form of business organisation, two or more persons who have agreed to carry on some business jointly. In partnership, at least two persons are required. Maximum number of members may be 100.
2. In partnership, more capital, resources, management skills, specialisation, etc. are available because it is managed by two or more persons.
3. As there are two or more partners, it is very difficult to maintain secrecy.
4. Delay in decision-making because all the important decisions regarding business matters are taken after the consent of all the partners.
5. Every partner is individually as well as jointly liable for all the risk of a partnership.
6. In partnership form of Business organisation, profits & losses are shared amoung partners in pre-determined ratio.