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Distinguish between the following

Sole Trading Concern and Partnership Firm.

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Sole Trading Concern Partnership Firm
(1) Meaning Sole proprietorship is owned and controlled by one person. Partnership firm is owned and controlled by two or more persons called as ‘Partners’.
(2) Formation Sole trading concern can be formed easily. It is started as soon as the owner decides. Partnership firm is formed by an agreement between two or more persons.
(3) Numbers of Members Sole trading concern is owned by a single person. Minimum 2 members are needed for starting business. The maximum number is 50.
(4) Registration There is no need for registration of sole trading concern A partnership firm may or may not be registered. However, it is always desirable for the firm to be registered. It is compulsory in Maharashtra.
(5) Secrecy It is possible to have maximum business secrecy. Secrecy is shared among all the partners.
(6) Liability Liability of a sole trader is unlimited Liability of a partner is unlimited, joint and several.
(7) Management The sole trader looks after management of business. He is manager of the business. All partners take part in management of the firm according to their skills.
(8) Capital The entire capital is contributed by the sole trader, comparatively limited. Partners contribute capital to the firm, comparatively more.
(9) Act/Law There is no special Act governing the Sole Trading concern. Partnerships are governed by the Indian Partnership Act, 1932.
(10) Sharing of Profit The sole trader alone enjoys all the profits of business. Partners share the profits of business as per the ratio given in the agreement.
(11) Risk In this form of business organization, the risk is assumed by sole trader alone. In partnership firm, the risk is shared by all the partners.
(12) Disputes There is no room for disputes among owners, as there is only a single owner. There can be disputes among partners.

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