Difference between company and partnership

Difference between company and partnership

1. Corporate Legal Environment (Difference between Company and Partnership Firm)

2. COMPANY A   company  is an  association  or collection of individuals, whether  natural persons ,  legal persons , or a mixture of both. Company members share a common purpose and unite in order to focus their various  talents  and organize their collectively available  skills   or resources  to achieve specific, declared  goals .

3. PARTNERSHIP FIRM A   business  organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business.

4. BASIS COMPANY PARTNERSHIP FIRM LEGALITY Company is an artificial legal person. Partnership is not a legal person. PERPETUAL  SUCCESSION Company has perpetual succession. Partnership firm does not have perpetual succession. REGISTRATION Company is created by registration under Companies Act. For a partnership firm registration is not compulsory. It is guided by Indian Contract Act and Partnership Act. NUMBER OF MEMBERS Private Limited Company shall have at least 2 members and maximum 50 members. Partnership firm shall have at least 2 members and maximum 20 members and for banking business, maximum 10 members. LIABILITY In a private limited company, liability of the members can be limited by shares or by guarantee. Liability of members is unlimited in a partnership firm.

5. BASIS COMPANY PARTNERSHIP FIRM AGENT A member is not an agent of company or of other members. Partner is an agent of firm and other partners. MANAGEMENT Ordinary members cannot take part in management of a company. Only director members can take part in management.  Partners can take part in   management of a firm. NO MINIMUM PAID UP CAPITAL Private limited company shall have a minimum paid up capital of   Rupees 1,00,000/-(Rupees One Lakh Only) and public limited  company of Rs. 5,00,000/- (Rupees Five Lakh Only). There is no minimum paid up capital for a partnership firm. DISTINCT ENTITY A company is an entity distinct from its members. It may own property, make contracts, sue and be sued in its own name.  The property of a firm is   owned by the partners. It can also sue and be sued in the firm’s name and   partners can also be sued individually.

6. BASIS COMPANY PARTNERSHIP FIRM TRANSFER OF SHARES Shares of a private limited company can be transferred with ease. Partner can transfer his share but the assignee does not become a partner. He is only entitled to share of Profits. DISSOLUTION A single member cannot wind up a company.                 A partnership may be dissolved by any partner at any time. BINDING BY ACT Member cannot bind company by his act.   Partner can bind firm by his act.