The difference between partnership and company is related to formation. The company is formed by getting registration under the company act. On the other hand, the partnership is formed by signing an agreement by all the partners without any registration.
Meaning of Partnership?
The meaning of partnership is an association of two or more persons who are jointly run the business with the aim to earn a profit. In partnership, partners agree to share the profit as well as loss in the business. This type of business removes the problem of a sole proprietorship. The partnership firm of business is governed by the Indian Partnership Act 1932.
Definitions:
A partnership is a relation between two or more persons who have agreed to share the profits of the business carried on by all or any of them acting for all.
– The Indian Partnership Act, 1932
Meaning of company?
A company is a legal entity formed by a group of individuals to engage in commercial or industrial business. We can classify the company as a partnership, joint-stock company, private company, public company. The company have its own common seal and it is an artificial person because it has its own name and bank account.
According to the definition of a company by the Indian Act 2013
“A registered association which is an artificial legal person, having an independent legal, entity with perpetual succession, a common seal for its signatures, a common capital comprised of transferable shares and carrying limited liability.”
The Chart of difference between Partnership and Company:
|
Points of differences |
Partnership |
Company |
| Meaning | The meaning of partnership is an association of two or more persons who are jointly run the business with the aim to earn a profit | A company is a legal entity formed by a group of individuals to engage in commercial or industrial business. |
| Formation | The partnership is formed by the agreement between al the partners. | The company is formed by getting registration under the company act. |
| Liability | The liability of partners is unlimited under the partnership. | The liability of the members is limited according to the capital invested by them. |
| Management |
All the business operation are managed by all the partners. |
The Board of directors and professionals are managing the operations of the company. |
| Continuity | A partnership firm may be dissolved on the death, insolvency of any partner. | The company stable and continues as the death of any member does not affect the existence of the company. |
| Legal entity | In partnership, no separate legal entity from its members. | The company is a separate legal entity from its members. |
| Governed by | It is governed by a partnership Act. | The company is governed by the Companies Act. |
| Profit | In a partnership firm, profit is distributed between the partners according to the agreement or partnership deed. | In the company, profit is distributed according to the number of shares of the members. |
| Secrecy of the business | In partnership, business secrets are shared among all the partners. |
Capital is contributed by large financial resources. |
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Conclusion:
Thus, the partnership is related to the association of two or more individuals who start, run and control the business operations. Whereas, the company have a separate legal entity all the operations are run and control by the board of directors of the company.
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