Differences Between Partnership Firm and Company
The principal
points of distinction between a partnership firm and a company are as follows:
points of distinction between a partnership firm and a company are as follows:
|
Partnership Firm
|
Company
|
|
A partnership firm is not distinct from the several
persons who form the partnership. |
A company is a distinct legal person.
|
|
In a partnership, the property of the firm is the
property of the individuals comprising it. |
In a company, it belongs to the company and not to
the individuals who are its members. |
|
Creditors of a partnership firm are creditors of
individual partners and a decree against the firm can be executed against the partners jointly and severally. |
The creditors of a company can proceed only against
the company and not against its members. |
|
Partners are the agents of the firm. A partner can
dispose of the property and incur liabilities as long as he acts in the course of the firm’s business. |
Members of a company are not its agents. A member of
a company cannot dispose of the property and incur liabilities in the course of the company’s business. |
|
A partner cannot contract with his firm.
|
A member can contract with his company.
|
|
A partner cannot transfer his share and make the transferee a member of the firm without the consent of the other partners.
|
A company’s share can ordinarily be transferred
|
|
A partner’s liability is always unlimited.
|
The liability of shareholder may be limited either
by shares or a guarantee. |
|
The death or insolvency of a partner dissolves the firm,
unless otherwise provided. |
A company has perpetual succession, i.e. the death
or insolvency of a shareholder or all of them does not affect the life of the company. |
|
The accounts of a firm are audited at the discretion
of the partners. |
A company is required to have its accounts audited
annually by a chartered accountant. |
|
A partnership firm, on the other hand, is the result
of an agreement and can be dissolved at any time by agreement among the partners. |
A company, being a creation of law, can only be
dissolved as laid down by law. |
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