Question

Distinguish between the following.
Sole Trading concern and partnership firm.

Answer 1

 

Basis of Difference	Sole Trading Concern	Partnership Firm
Formation	Formed at the will of the owner.	Formed with a mutual agreement (oral or written) among the partners.
Management and control	Managed and controlled solely by the owner.	Management and control of ownership are shared by the partners.
Sharing of profits and losses	Profits and losses belong to the owner.	Profits and losses are shared among the partners in a predecided ratio.
Number of members	Only one member (owner) runs it.	Minimum-2, Maximum (in case of a banking business)- 10, Maximum (in case of ordinary business)- 20.
Governance	There is no regulating act to govern it.	It is governed by the Indian Partnership Act 1932.
Decision making	Decision making is rapid, as all the decisions are taken by the sole proprietor.	Decision making is relatively delayed, as it requires the consent of all partners.