COMPARISON AND DISTINCTION BETWEEN

SOLE PROPRIETORSHIP, PARTNERSHIP AND COMPANY

SOLE
FEATURES PARTNERSHIP COMPANY
PROPRIETORSHIP
Must be formed in
No need to be formed Can be formed orally writing, through a
1. Formation
in writing or in writing Memorandum and
Articles of Association.
Partners are agents of
The owner manages the firm for carrying on
Members of a
the business himself or its business in the
company as such are
2. Management can hire employees to ordinary course of the
neither its manager
manage the firm for business and are
(directors) nor agent
him generally entitled to
manage the firm
Needs to register his Needs to register their
Need to be registered
business with the CCM business with CCM
with the CCM and as a
3. Registration under the Registration under the Registration
company under the
of Businesses Act of Businesses Act
Companies Act 2016
1956 1956
There is no maximum
The maximum is 20,
number of members
There is only 1 person there is no limit on the
4. Number of members excepts for a private
in a sole proprietorship number of members
company which case
for professional firm
the maximum is 50
A company must be
No agreement is A partnership must constituted in writing,
necessary since there have an agreement, i.e. by Articles of
5. Constitution
is only 1 person by either orally or in Association and
himself writing Memorandum of
Association
Liability for the firm
Liability for the Members are not liable
debts is unlimited
6. Liability businesss debts is for the companys
(unless it is a limited
unlimited debts
liability partnership)
A company is
A sole proprietorship
A partnership may be dissolved by winding
may be dissolved
7. Dissolution dissolved informally by up and liquidation,
informally by the owner
agreement of partners which are formal
himself
procedures