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Difference between Partnership and Company

Difference between Partnership and Company

The main point of Difference between Partnership and Company are as follow;


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Basic of Difference



Formation It formation is easy and less expensive, partnership form under partnership act 1932 (India, Pakistan) The formation of Company is lengthy and expensive. It forms under company ordinance 1984


Legal Entity:  A partnership has no separate legal entity. the acts of the firm bind the partners and the acts of individual partners ordinarily bind the firm Joint stock company has a separate legal entity separate from their shareholders. It may act in its own right without making shareholders liable for it.
Liability the liability of the partners is unlimited and they are equally and separately liable for the debts of the firm. The liability of the shareholders of a company is limited to the face value of the shares bought by them.
Number of Members The minimum number of partners is two and maximum number is not given according to Partnership act. In a public company minimum number is seven while there is no maximum limit.
Existence A partnership does not have stable life and perpetual existence company has a constant and perpetual succession. The change of membership or death of insolvency of the member does not affects its affairs and existence of company.
Profit The net profit is distributed among the partners according to agreed ration The net profit distributed among the shareholders known as Dividend.
Transfer of Shares A partner can transfer his share only with the consent of all partners. shareholders of a company enjoy freedom to transfer their shares. But, there is some restriction in a private company.
Management Partners has right to take part in the management and operation of the firm shareholder has no right to take part in the management and operations of the company. The Company Elect Board of Directors, who manages the company’s affairs.
Stability It lacks stability and dissolved on admission, retirement and death of partner. It stabile and no effect on company when shareholder got retirement or death.
Capital In partnership, partners invest money according to their wish and the consent of other partners. The capital of a company is divided into shares. Company has no right to issue shares more than the authorized capital mentioned in its article of association.
Changes in Capital The partners can easily change the amount of capital, no legal work required To change the authorized capital of company took a lot of time and under go through legal process.
Final Accounts and Audit A partnership is not under statutory responsibility for the preparation of final accounts and audit the books of accounts. Final accounts of the company must be organized and distributed among the shareholders. It should be audited by a qualified auditor.
Dissolution A partnership is dissolved according to the agreement among the partners or by the court. A company is dissolved only through legal procedures.
Objective and Power
The clauses of agreement deed of a partnership can be altered with mutual consent of the partners as and when they desire.
The powers and objects of a company are set out in the Memorandum of Association .these can be altered only in accordance with the provisions of Companies ordinance   
statutory regulations  a partnership, thought governed by the partnership Act, is relatively free from statutory regulations.  

company right from its inception has to comply with various and varied statutory regulation

Conclusion  partnership is weak form of organization with uncertain existence. it is suitable for medium scale business operation. the joint stock company is more sound and durable and is suitable for doing business on large. 

About the author

Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.

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