Difference between Partnership and Company

Sole proprietorship, Partnering business, and Public and Private limited are a few forms of business organization. Everyone has different features as well as advantages and disadvantages. Starting a business may be hard without knowledge of a country’s law.

UK Company law may be different from Germany. In general, the basics are the same. In this reading, you’ll be able to analyze the difference between a Partnership and Company [Public Limited].

The Difference Difference between a Partnership and a Company

Partnership	Company
Easy Formation	Complex Formation
Full Liability	Limited Liability
Two to Twenty Seven Partners	Minimum Seven Members
Unable to Transfer	Easily Transfer
No Entity	Legal Entity
Easy Capital Management	Shareholder’s acceptance is required
Accounts at own choice	Everything in the accounts
Can manage Business	The Board of Directors manages business
Distribution in Partners	Distribution in shareholders
The audit isn’t mandatory	Audit is mandatory
Easy Termination	Hard Dissolution
Cannot sell business shares	Can sell business shares
Short Life	Long Life
No Reports required	Reports required
Can Change business	Can not change it easily
Meeting are not necessary	Should do Meetings

1. Formation

Public Limited Company

There is a long and complicated process for the formation of a public company. Many legal documents are to be prepared and submitted to the registrar’s office which requires a long time.

Partnership

There is a simple process for the formation. No legal documents are necessary. Agreement by oral or written is required only for formation.

2. Liability

Public Limited Company

The liability of shareholders is limited to the unpaid value of the shareholders are not liable to settle the obligations of the company.

Partnership

It is one of the biggest disadvantages of a partnership is that every partner had unlimited liability in his firm. It means that the liability of partners is not limited to the invested amount but private assets are also liable to clear the liabilities of the firm.

3. Number of Members

Public Limited Company

There is no restriction on the maximum number of members. It may be a million or thousand but not less than seven.

Partnership

It consists of at least two partners but not more than twenty in the case of ordinary business and not more than ten in the case of banking business.

4. Transferability

Public Limited Company

There is no restriction for transforming of share of public company shareholders may easily dispose of their share in the stock exchange market.

Partnership

A partner cannot transfer his share and interest to another person without the consent of existing partners.

5. Entity

Public Limited Company

It is created by law and possesses a separate legal entity. So it can purchase property in its own name. it can sue in its separate position.

Partnership

The partnership’s important feature is to not have a separate legal entity from its members. Partners cannot be separated from the firm.

6. Capital

Public Limited Company

Its authorized capital is mentioned in the memorandum of association. It can be increased or decreased by special resolution which is passed in the shareholders meeting after the sanction of the court.

Partnership

Its capital is described in the agreement. It may be changed by mutual consent of the partners.

7. Maintenance of Books

Public Limited Company

Statutory books and other account books are to be maintained by law.

Partnership

There is no compulsion to keep statutory or definite books. Each partner is allowed to inspect and copy the accounts.

8. Legislation

Public Limited Company

The activities of public companies are controlled by the company ordinance 1984.

Partnership

It is controlled by the partnership Act 1932 which was adopted in our country after partition.

9. Management Authority

Public Limited Company

Shareholders who are the actual owners of the company are not allowed to participate in the activities of the company but the board of directors is elected by the shareholders and is elected by the shareholders which are considered the supreme authority of the company. so all the activities are conducted by these persons.

Partnership

Each partner is allowed to conduct personally the business activities. But generally, one or two partners are selected to manage the firm.

10. Profit

Public Limited Company

Profit is distributed among the shareholders according to the provision of the Articles and the decision of the Board of Directors.

Partnership

It is distributed among the partners according to the partnership deed.

11. Audit

Public Limited Company

Accounts must be audited by a qualified chartered accountant according to the company’s ordinance.

Partnership

The audit is not compulsory by law but it depends upon the agreement.

12. Dissolution

Public Limited Company

It cannot dissolve easily. There is a separate legal process for the winding up of the company. it can be wound up according to the provision of the Company Act.

Partnership

It can be dissolved easily by mutual consent of the partners. It may be dissolved by any one of the partners by serving notice of fourteen days to other partners

13. Right of Issue

Pubic Limited Company

It can issue shares, debentures, and other securities to increase its capital and business fund

Partnership

It cannot issue any type of securities in the market to increase its financial sources.

14. Life

Pubic Limited Company

It has continued existence. The life of the directors and shareholders is not connected with the running business life of the company. so its activities are not affected by the retirement or death of any shareholders.

Partnership

It does not possess long life. Its business may be affected by the death insolvency or retirement of any partner.

15. Submission of Reports

Pubic Limited Company

Certain documents, statements, and reports must be submitted to the government authority.

Partnership

There is no restriction to submitting the various reports and documents to any authority.

16. Business

Pubic Limited Company

The promoters are restricted to carry on a business that is mentioned in the object clause of the memorandum of association.

Partnership

Partners may carry on any type of business and it may easily be changed by mutual consultation.

17. Meeting

Pubic Limited Company

It has to call necessary meetings of shareholders in which problems are disposed of by various resolutions.

Partnership

No compulsion to call any type of meeting and submission reports to the registrar.

Difference Between Partnership & Public Limited Company

Partnership	Public Limited company
It is controlled under the limited partnership act, of 1907	Its activities are controlled by the Company ordinance, 1984.
There are at least two members and a maximum of 20 members in the case of ordinary business and 10 in the banking partnership	The minimum number of members is two but not more than fifty
It has no legal entity. It is not independent of the partners.	It enjoys a separate entity and a common seal. Its existence is independent of the members.
There are two classes of partners in limited partnerships i.e. ordinary partners (Unlimited liability partners) and limited liability partnerships.	There is only one class of members i.e. shareholders with limited liability.
A certificate of incorporation is not needed by the limited partnership. & Business can be commenced immediately after the agreement	It can commence business only after obtaining the certificates of incorporation from the register’s office.
Its management is conducted according to the provision of the partnership agreement. But generally, business is carried on by one or two partners Limited partner is not allowed to participate in the business	It procedure of management is laid down in the Articles of Association Each member has the right to conduct their business personally.
There is no retraction to audit the accounts from the chartered accountant by lass but it depends upon the partnership agreement	It has to keep the accounts books and statutory books. An annual audit is compulsory by Company Ordinance.
There must be a limited partner and one unlimited liability partner for the formation of this type of organization.	It can commence its business with at least two members with limited liabilities
Partners may conduct any type of business or change it by mutual consent.	The nature of the business is mentioned in the object clause of the Memorandum of Association. It cannot be changed except by the sanction of the court.
No legal documents are required to be submitted to the registrar’s office before its formation.	Some legal documents i.e. Articles of Association are necessary to be submitted to the registrar’s office along with other documents before its incorporation
There is no compulsion to hold any meeting under the Partnership Act, of 1932. No reports are required to be filled with any office.	Some specific meetings must be held within the prescribed time under the provision of the Company ordinance. Specific reports are to be submitted to the concerned office
Its capital is laid down in the Articles of Partnership (Partnership deed). It may be changed easily to mutual consent.	Its capital is mentioned in the Memorandum of Association. It cannot be changed without the sanction of the court.
Business profit is distributed among the partners according to the partnership agreement.	The Policy of the distribution of profit is decided at the Board of Directors Meeting according to the provisions Articles of Association.
Tax is imposed on the individual profit of the partners.	Tax is paid by the company on the whole of its profit.
Its internal management is conducted by a partnership deed.	Its internal activities are controlled by the Articles of Association.
The partnership may be dissolved on the retirement or death of any partner. In the case of an insolvent, the Insolvency Act applies	It enjoys continued existence. Its running business life is not dissolved on the death or retirement of any member.

Difference Between Partnership and Private Limited Company

Limited Partnership	Private Limited Company
It is controlled under the partnership Act 1932.	Its activities are controlled by the companies’ ordinance 1984.
There are at least two members and a maximum of 20 members in the case of ordinary business and 10 in the banking partnership.	The minimum number of members is two but not more than fifty.
It is no legal entity. It is not independent of the partners.	It enjoys a separate entity and a common seal. Its existence is independent of the members.
There are two classes of partners in limited partnership i.e. ordinary partners (unlimited liability partners) and limited liability partners.	There is only one class of members i.e. shareholders with limited liability.
A certificate of incorporation is not needed by a limited partnership. Business can be commenced immediately after the agreement.	It can commence business only after obtaining the certificate of incorporation from the registrar’s office.
Its management is conducted according to the provision of the partnership agreement	Its procedure of management is laid down in the Articles of Association. Each member has the right to conduct their business personally.
But generally, business is carried on by one or two partners. Limited partners are not allowed to participate in the business.	It has to keep the accounts books and statutory books. An annual audit from any person is compulsory.
There is no restriction to audit the accounts from the chartered accountant by law, but it depends upon the partnership agreement.	It can commence its business with at least two members with limited liabilities.
There must be one limited partner and one unlimited liability partner for the formation of this type of organization.	The nature of business is mentioned in the object clause of the Memorandum of Association, it cannot be changed except by the sanction of the court.
Partners may conduct any type of business or change it by mutual consent.	Some legal documents i.e. Articles of Association and Memorandum of Association are necessary to be submitted to the registrar’s office along with other documents before its incorporation.
No legal documents are required to be submitted to the registrar’s office before its formation.	Some specific meetings must be held within the prescribed time under the provision of the Company ordinance. Specific reports are to be submitted to the concerned office.
There is no compulsion to hold any kind of meeting under the partnership act 1932. No reports are required to be filed with any office.	Its capital is mentioned in the memorandum of Association it cannot be changed without the sanction of the court.
Its capital is laid down in the Articles of partnership (partnership deed) it may be changed easily by mutual consent.	The policy of the distribution of profit is decided at the Board of directors Meeting according to the provision of the Articles of Association.
Business profit is distributed among the partners according to the partnership agreement.	Tax is paid by the company on the whole of its profit.
Tax is imposed on the individual profits of the partners.	Its internal activities are controlled by the Articles of Association.
Its internal management is conducted by the partnership deed.	It enjoys continued existence. Its running business life is not dissolved on the death or retirement of any member.
A partnership may be dissolved on the retirement or death of any partner. In case of insolvency, the insolvency act applies.	There is a separate legal procedure for the winding up of the company. insolvency act may not apply.