Key Differences between Sole Proprietorship and Joint Hindu Family Firm –

A Comparison Chart

BASIS FOR PROPRIETORSHIP JOINT HINDU FAMILY

COMPARISON FIRM

Meaning It is a commercial organization which It is a commercial organization.

is owned & managed by a single The ancestral business is
person conducted by joint Hindu family

Membership Not more than single owner No limit on membership.

( Up to Generations)

Ownership Business assets and properties are All the family members are joint
owned by the proprietor owners

Liability The liability of sole trade is unlimited Karta’s liability is unlimited.

Liability of the members is
limited to their share in the joint
Hindu family property

Financial Financial resources are available Fund are more than that of a
Resources proprietor

Stability Lack of stability since the existence of Comparatively more stable since
sole trading concern depends upon the after the death of Karta, the next
survival of the sole trader senior family member will take
over and continues business
activities

Profit and losses All profit and losses are concerned The profit and losses are shared
belong to sole trader born by him by all the co-parceners

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 Key Differences between Sole Proprietorship and Partnership –
A Comparison Chart
BASIS FOR
SOLE PROPRIETORSHIP PARTNERSHIP
COMPARISON

A type of business organization, in A business form in which two

which only one person is the owner as or more persons agree to carry
Meaning
well as operator of the business, is on business and share profits &
known as Sole Proprietorship. losses is known as Partnership.

Governing Act No specific statute Indian Partnership Act, 1932

Known as sole trader or sole Individually known as partners

Owner
proprietor. and collectively known as firm.

Incorporation Not required Voluntary

Minimum
Only one Two
members

Maximum
Only one 100 partners
members

Liability Borne by the proprietor only. Shared by the partners.

Decision making Quick Delay

Depends on the desire and

Duration Uncertain
capacity of the partners.

Proprietor is solely responsible for the

Profit & Loss Shared in agreed ratio
profits & losses.

Business secrets are not open to any Business secrets are open to
Secrecy
person except the proprietor. each and every partner.

Scope for raising capital is

Finance Scope for raising capital is limited.
comparatively high.

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 Key Differences between Partnership and Limited Liability Partnership (LLP) –
A Comparison Chart
BASIS FOR LIMITED LIABILITY
PARTNERSHIP
COMPARISON PARTNERSHIP (LLP)

Partnership refers to an
Limited Liability Partnership is a form
arrangement wherein two or
of business operation which combines
Meaning more person agree to carry
the features of a partnership and a
on a business and share
body corporate.
profits & losses mutually.

Indian Partnership Act, Limited Liability Partnership Act,

Governed By
1932 2008

Registration Optional Mandatory

Charter document Partnership deed LLP Agreement

Limited to capital contribution, except

Liability Unlimited
in case of fraud.

It cannot enter into contract

Contractual capacity It can sue and be sued in its name.
in its name.

Partners are collectively

Legal Status known as firm, so there is It has a separate legal status.
no separate legal entity.

Name of firm Any name Name containing LLP as suffix

Maximum partners 100 partners No limit

Cannot be held in the name

Property Can be held in the name of the LLP.
of firm.

Perpetual
No Yes
Succession

Mandatory, only if turnover and

Audit of accounts Not mandatory capital contribution overreaches 40
lakhs and 25 lakhs respectively.

Partners are agents of firm

Relationship Partners are agents of LLP only.
and other partners as well.

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 Key Differences between Partnership Firm and Company –
A Comparison Chart
BASIS FOR COMPARISON PARTNERSHIP FIRM COMPANY

Meaning When two or more persons A company is an association of

agree to carry on a business persons who invests money towards
and share the profits & losses a common stock, for carrying on a
mutually, it is known as a business and shares the profits &
Partnership firm. losses of the business.

Governing Act Indian Partnership Act, 1932 Indian Companies Act, 2013

How it is created? Partnership firm is created The company is created by

by mutual agreement incorporation under the Companies
between the partners. Act.

Registration Voluntary Obligatory

Minimum number of persons Two Two in case of private company and

Seven in case of public company.

Maximum number of 100 partners Private company: 200 members

persons Public company : Unlimited

Audit Not Mandatory Mandatory

Management of the concern Partners themselves Board of Directors

Liability Unlimited Limited

Contractual capacity A firm cannot enter into A company can sue and be sued in
contracts in its own name. its own name.

Minimum capital No such requirement. @ No such requirement.

Use of word limited No such requirement. Must use the word 'limited' or
'private limited' as the case may be.

Commencement of Business No Not required as per Companies

Certificate (Amendment) Act, 2015.

Legal formalities for No Yes

Winding up / Dissolution

Separate legal entity No Yes

Mutual agency Yes No

@It was 1 lakh in case of private company and 5 lakhs in case of public company as per Companies Act,
2013. No such stipulation of Minimum Paid up Capital as per Companies (Amendment) Act, 2015.

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 Key Differences between Public Ltd. Company and Private Ltd. Company –
A Comparison Chart
BASIS FOR COMPARISON PUBLIC COMPANY PRIVATE COMPANY

Meaning A public company is a A private company is a

company which is owned and company which is owned
traded publicly. and traded privately.

Minimum members 7 2

Maximum members Unlimited 200

Minimum Directors 3 2
@ @
Minimum paid up capital No such stipulation No such stipulation

Suffix Limited Private Limited

$
Certificate to commence Not required . $Not required
business

Issue of prospectus / Statement Obligatory Not required

in lieu of prospectus

Public subscription Allowed Not allowed

Transfer of shares Unrestricted Restricted

Quorum at AGM

PUBLIC COMPANY i) 5 members must present in person if the number of members

as on the date of meeting is not more than one thousand;
ii) 15 members must present in person if the number of members
as on the date of meeting is more than one thousand but up to
five thousand;
iii) 30 members must present in person if the number of members
as on the date of meeting exceeds five thousand;

PRIVATE COMPANY 2 members must present in person.

@ It was 1 lakh in case of private company and 5 lakhs in case of public company as per Companies
Act, 2013. No such stipulation of Minimum Paid up Capital as per Companies (Amendment) Act,
2015

$ No requirement of Commencement of Business Certificate as per Companies

(Amendment)
Act, 2015 as it was required by previous company law

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