Difference between Sole Proprietorship and Partnership


Difference between Sole Proprietorship and Partnership

Sole Proprietorship Vs Partnership

Sole Proprietorship Vs Partnership, These days, many forms of business organization are existing. Sole Proprietorship is one of the first-born and easiest form of business, which is still established across the world. In sole proprietorship, only one person manages and controls the business. But due to a number of disadvantages in this form of business, it gave birth to Partnership, where the number of owners has been increased to 2 or more. Here, the partners share the profits and losses, in the agreed ratio.

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A lot of people complete confusion about these two business forms. If you are looking for, Sole Proprietorship Vs Partnership then this is your perfect target.

Sole Proprietorship Vs Partnership
Sole Proprietorship Vs Partnership

Sole Proprietorship Vs Partnership are as follows:

S.NoBasis for ComparisonSole ProprietorshipPartnership
1Membership:It is owned and controlled by only one personTwo or more persons known as partners own partnership.
2Agreement:The question of agreement does not arise. An agreement is necessarily required to form partnership
3Owner:Known as sole trader or sole proprietorIndividually known as partners and collectively known as firm.
4Capital:Only the capital of one person is used in the business. Thus, it may suffer from shortage of capital. All the partners contribute towards capital of the firm. So, more capital than sole trading can be collected.
5Decision:The owners have full control over his business. So he is able to take decision promptly. All important decisions are taken by consent of all partners. So, it is time consuming process.
6Secrecy: There is a complete secrecy in the business. The secrets of the business are in the knowledge of all the partners.
7LiabilityBears by sole owner only, unlimitedShared by the partners,
8Risk:The whole risk is bearer by the proprietorAll the partners share risk.
9Management: This business is controlled by one person only. All partners have equal rights and all of them can participate in the management.
10DurationUndefinedDepends on the desire and capability of the partners.
11 Desire for Work:The sole proprietor owns all and risks all. So, he works with interest and dedications.There is less desire for work because a partner may think that other partners will share the benefit of his work too. are as follows:
12Minimum & maximum limit of ownerThe minimum and maximum limit of owner is 1.The minimum limit is 2 while maximum limit exceeds to 10 in banking business and 20 in other business,
13Government Law/actNot specifiedPartnership Act 1932


We know that everything has two sides, so as with the case sole proprietorship and partnership. The former, is very simple to be established while the latter needs the agreement of the two or more persons but if you put it another way then you will see that there is more hand to work, more investment to invest and more data to apply as well as in the absence of one partner the business will not suffer.