what is differentiate between a sole trading concern and a partnership firm?
1 Answer
The differences between a sole trading concern and a sole trading concern are given below:
|
Basis of difference |
Sole trading concern |
Partnership firm |
|
No.of members |
A sole trading concern is established and managed by a single person. |
A partnership firm is established and managed by two or more person. |
|
Investment |
A single person invests capital for the operation of the business. |
Two or more partners invest capital for the operation of the business. |
|
Agreement |
Due to only one sole trader, sole trading concern doesn't need any agreement. |
An agreement among the partners is compulsory for the operation of the business. |
|
Decision Making |
Decision of business is taken quickly by a single person. There is a high chance of making a wrong decision. |
Decisions of a partnership are taken by all partners through their mutual consent. Decision making is delayed but decisions become matured and rational. |
|
Secrecy |
The sole trader can maintain the full secrecy of the business matter. |
Tight business secrecy cannot be maintained. Chances of leaking business secrecy are comparatively higher in partnership. |
|
Management |
The business is managed and control by a single person. |
The business is managed and controlled by two or more than two persons. |
|
Risk Bearing |
The sole trader himself bears all risk and responsibilities of the business. |
All partners share the risk and responsibility. |
| Registration | The sole trading concern should be registered under the Private Firm Registration Act 2014. | The partnership should be registered under the Partnership Act, 2020. |