Question

Explain the difference between sole trading and partnership.

Answer 1

Difference between sole trading and partnership:

Mode of Difference	Partnership	Sole trading
Number of members	Partnership should at least have 2 members but there is no limit on maximum members according to Indian Partnership Act 1932. But according to the Company Act, it should not be more then 50.	There is a single individual who is the sole owner.
Act	Partnership was enacted under Indian Partnership Act.1932.	There is no separate act for sole trade.
Registration	There is no compulsion for registration, but it is desirable.	Registration is compulsory.
Ease in formation	The formation is easy, but some legal formalities need to be done, like forming the annexure.	There is no need of  agreement in sole trading. The formation is comparatively easier.
Means of Investment	Due to many partners, the means of investment is more.	There is a limit to investment in sole trade.
Business arrangement	Every partner arranges the business.	The single trader arranges the business here.
Area	The area of business is more.	The area of business is limited.
Secrecy	Due to more number of individuals, the secrecy is less.	Secrecy exit exit here.
Judgement	Every decision is taken with mutual consent of every partner. Therefore judgment takes more time.	It takes less time  for judgment because the decision  lies in single hands.
Inspiration of Tasks Closure	There is less inspiration of activities in partnership. It takes more time than sole trading.	There is more inspiration in sole Trading. The closure of the business is according to the will of the Trader.