WHAT ARE THE DIFFERENCES AMONG SOLE PROPRIETORSHIP, PARTNERSHIP AND COMPANY?
1, Sole proprietorship is the simplest form of business.
Partnership is partly simple and partly complex form of business.
Company or corporation is a complex form of business.
2, Sole proprietorship is personal business where a single person is carrying the business.
Partnership is partly regulated by the person or persons and partly by the government through laws.
Company is wholly regulated by the government.
3, In sole proprietorship, the person carrying and managing the business is the owner of that business.
In partnership, the persons by whom the business is regulated and managed are partners and collectively owners of that business and are collectively called firm.
The persons who are regulating and managing the company are the board of directors and they are not the owner of the business they are just hired by the company to do all. So we can say that ownership of company is constructive not an actual.
4, In sole proprietorship, the owner or proprietor has direct control of decision making.
Partners have to control according to the agreed decision of the partners as well as according to law.
Company is to be controlled through law no one can personally control it by decision making.
5, The liability is unlimited and on single person in proprietorship.
In partnership liability is on all the partners and it is unlimited liability.
Company has limited liability.
6, All the profit and loss goes to a single person in sole proprietorship.
All the partners share profit and lose among them.
Company pays salaries to its members.
7, A single person has to pay all the tax in sole proprietorship even from his personal assets.
Tax is on personal assets of the partners and firm pays no tax.
Company pays its own tax apart from its members.
8, Sole proprietorship and partnership do not have continuous existence but the company enjoys continuous existence.
9, Sole proprietor has to raise money by the proprietor though his own means.
In partnership, partners raise money by themselves collectively or individually.
Company is able to raise capital by selling shares and taking loans.
10, In sole proprietorship, business cannot be sued and sole proprietor is to be sued personally.
Firm can not to be sued also and partners can be sued and they will be personally responsible.
Company can be sued and will be responsible apart from its members.
11, Sole proprietorship business cannot own personal assets or property.
Firm also cannot be the owner of property or assets.
Company can own its personal property and assets.
12, Sole proprietorship enjoys no separate legal entity apart from its owner.
Firm does not also possess separate legal entity.
Company enjoys separate legal entity and corporate personality.
13, A sole proprietorship is the easiest business to start due to low cost and not having legal entity and requirements of paperwork.
Firm is bit difficult from sole proprietorship due to having partners and agreement among them and it may be registered and maybe not.
Company is most difficult because it has to be registered and follow laws.
14, Sole proprietorship is not required to file annual reports due to any purpose.
Partnership is also a business among partners through agreement so it is also not required to file any report by government.
Corporation has to keep strict financial records and keep a detail record of reaching on certain decision.
15, Income would be taxable at personal rate in proprietorship like if business is most profitable, proprietor has to pay the higher tax.
In firm, tax also accords to income or property.
Tax may be lower for incorporated business.
REFERENCES:
http://www.canadabusiness.ca/eng/page/2853/
http://outright.com/blog/s-corporation-or-sole-proprietorship-which-business-entity-is-right-for-me/
http://www.principlesofaccounts.com.sg/partnerships-and-limited-liability-companies/
http://smallbusiness.chron.com/differences-between-sole-proprietorship-partnership-corporation-3990.html
http://yourbusiness.azcentral.com/differences-between-sole-proprietorship-partnership-corporation-1729.html
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