In a tabula form outline five difference between a sole trader and a partnership
Answers
Answer:
Sole Proprietorship Partnership
Definition
It is a business model where an individual is an owner as well as the operator of the business. It is a business model where two or more persons agree to carry on business and share profits and losses mutually.
Business act
Comes under no specific act Governed by the Indian Partnership Act, 1932
Owner called as
Sole Proprietor Individual members known as partners and collectively known as a firm.
Incorporation Required
Not required Voluntary
Minimum Members
One Two
Maximum Members
Only One 100
Freedom to operate
Decision-making rests with the proprietor only, hence full freedom to operate. The decision needs to be mutually acceptable to all partners. A difference of opinion can arise and cause loss of business.
Liability
Rests with the proprietor only Shared by partners of the firm
Finance
Scope of raising capital is limited. Scope of raising capital is relatively high.