A corporation is a group of people who have banded together for a common goal and share in the profits and losses. Even though there are certain parallels between the Company and the partnership firm, some differences are also. A partnership firm’s maximum number of partners is limited to 20. This led to the development of the Company, which can have any number of members example d mart franchise.
A partnership is a commercial structure in which two or more people agree to start a firm on behalf of the company or partners and share earnings and losses equally.
In their capacities, the individuals are referred to as partners, while the firm is referred to as the firm.
Difference between company and partnership
- A partnership is a contract between two or more people who agree to work together combined to run a firm and share profits and losses with each other. An incorporated organization, often known as an artificial person, is a legal entity with its own identity, common seal, and everlasting succession.
- The registration of a partnership company is optional, but the registration of a corporation is required.
- There must be at minimum two partners to form a partnership. In the case of private firms, there must be at least two members, and in the case of public companies, there must be at least seven.
- A partnership firm’s maximum number of partners is limited to 100. In the case of a public corporation, the maximum number of partners is infinite, whereas, in the case of a private company, the maximum number of partners is 200.
- The next significant distinction is that there is no minimum capital requirement for forming a partnership. A public company’s minimum capital need is five lakhs, while a private company’s minimum capital requirement is 1 lakh.
- There are no legal requirements for the dissolution of a partnership firm. In contrast, a company’s dissolution is subject to any legal requirements.
- Any one of the partners can dissolve a partnership firm. On the other hand, the company cannot be wound up by any members.
- A partnership firm is not required to include the terms limited or private limited at the end of its name, whereas a corporation must include the terms ‘limited’ if it is a public corporation and ‘private limited’ if it is a private corporation.
- The partners’ liability is unlimited, whereas the Company’s liability is limited to the number of shares held by each member of the amount of guarantee they issued.
- Members are not liable for the actions of a company because it is an artificial person that can enter into contracts in its name. In a partnership firm, however, a partner can enter into a contract in their name with the approval of the other partners, and they can also be sued for the firm’s actions.
So these were the key differences between the two and hope you got the information.
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