Pakistan study notes for Matric, Intermediate, B.A, B.COM BSC, M.A, BCS. Free Pakistani Urdu educational school, colleges and University notes.

Differences between Partnership and Company

Differences between Partnership and Company

 

PARTNERSHIP COMPANY
Owners

1. Owners are referred to as partners.

Owners

Owners are known as shareholders or stockholders.

Number

2. Minimum number of partners is two and maximum twenty, and in banking business it is only ten.

Number

In private company minimum number of shareholders is 2 and maximum 50. In public company the least number is 7 with no upper limit

Agreement

3. Partnership agreement may he oral or written.

Agreement

Prospectus, articles and memorandum of association, etc. must be in writing.

Kinds of capital

4. There is only one type of capital.

Kinds of capital

Here capital is referred to as authorized, subscribed, issued, called-up, and paid-up capital.

Liability

5. The liability of partners is not limited.

Liability

The liability of shareholders is limited up to their investment.

Management

6. The management of business is in the hands of partners.

Management

The management is run by employees under the control of board of directors elected by shareholders.

Stability

7. It lacks stability and is dissolved on retirement, insanity, bankruptcy, admission, or death of a partner.

Stability

Company is not liquidated on these factors.

Transferability

8. Ownership or share of a partner cannot be transferred or else it would be dissolved.

Transferability

Shares are easily transferred from one person to another.

Mode of operation

9. The business is operated under the partnership agreement.

Mode of operation

It is run in accordance with the memorandum and articles of association.

Legal status

10. It can not enter into an agreement in its name.

Legal status

The company can enter into an agreement and can sue and be sued in its own name.

Liquidation

11. It can easily be liquidated at the discretion of the partners.

Liquidation

It has to pass through a legal formality and process to liquidate the company.

Change in capital

12. The amount of capital can easily be changed any time.

Change in capital

To change its authorized capital the company has to undergo a long legal procedure.

Limited

13. The word limited cannot be used with the firm’s name.

Limited

The word limited must be used with the name of the company.

Profit

14. The net income distributed to partners is known as profit.

Profit

The net income distributed to shareholders is known as dividend.

Right to profit

15. Partners have the right to draw their profit.

Right to profit

Right to profit Shareholders cannot receive dividend unless declared by the board of directors.

Taxation

16. Income tax is reduced because of division of profit among partners.

Taxation

Tax is imposed twice, first, as profit of the company, second, as the income of shareholders.

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