Question

Distinguish between the following:

Sole Trading concern and Partnership Firm.

Answer 1

Sole trading concern	Partnership firms:
A sole trading concern is a form of business organisation Which is owned, managed and controlled by one individual called ‘sole trader.	A partnership firm is a form of business organisation owned and managed by two or more persons.
Sole trading concern can be formed at any time. Its formation is easy and quick.	Partnership firm can be formed by an agreement between 2 or more competent persons. It’s formation is comparatively difficult.
A sole trading concern is owned, managed and controlled by a single person, i.e. the proprietor, himself.	Partnership firm is owned by partners jointly. The minimum number of members required is 2, while the maximum number is 50 for general business.
Registration is not necessary.	Partnership firm can be registered under the Indian Partnership Act, 1932. However, registration is compulsory in Maharashtra.
In sole trading concern, maximum business secrecy can be maintained.	The business secret is known to and shared by all the partners.
In sole trading concern, only one person, i.e. sole trader contributes his own skills.	In a partnership firm, diverse talents, skills and business contacts of all partners are pooled together. Therefore, benefits of principle of division of labor and expertise can be well obtained.