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Commercial Applications

Distinguish between partnership and sole proprietorship.

Partnership

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Answer

S.No.Basis of DistinctionSole ProprietorshipPartnership
1.Number of ownersOne person.Minimum: 2, Maximum: 50.
2.AgreementNo agreement is required.Agreement is essential.
3.Division of profits/lossNo division of profit and no sharing of risk.Division among the partners in agreed ratio.
4.Implied agencyNo implied agency.Generally every partner is an implied agent of the firm.
5.Ownership and controlNot shared.Shared by partners.
6.SecrecyComplete secrecy.Secrets known to partners.
7.Continuity of businessLife of business depends on proprietor.Greater continuity due to two or more partners.
8.CoordinationNo problem of coordination due to single owner.Coordination between partners required.

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