Differences between Sole Trader and Partnership
Sole Trader vs Partnership
The following are some of the differences between a Sole Trader and Partnership.
| Point of Difference | Sole Trader | Partnership |
|---|---|---|
| 1. Legal Formalities | No legal formalities have to be followed for starting the business. | Few legal formalities to be followed for starting the business. |
| 2. Legislation | It is not controlled by any legislation. | It is regulated by Partnership Act, 1932. |
| 3. No. of Members | It is totally one man's business. | There should be atleast two members. Maximum number of members is 20 in case of general business and 10 in case of Banking business. |
| 4. Agreement | It does not require any agreement as there is only one member. | Agreement or Deed either in writing or oral is necessary. |
| 5. Secrets | Business secrets can be maintained. | Business secrets cannot be maintained. |
| 6. Capital | Supply of capital is limited. | More capital can be secured. |
| 7. Decision | There is no delay in making decisions. | There might be delay in taking decisions due to difference of opinion among partners. |
| 8. Risk | Risk to be totally borne by one person. | Risk is to be shared among the partners. |
| 9. Management | Inefficient management due to limited supply of skills. | Collective skill of partners leads to efficient management. |
| 10. Continuation of business | Lack of children may lead to discontinuation of agreement. | Partnership can be continued by renewal of agreement. |
| 11. Distribution of profit | Profit or loss belongs to the single owner. | Profit or Loss is divided among the partners. |
