DIFFERENCE BETWEEN

SOLE PROPRIETORSHIP,
PARTNERSHIP &
JOINT STOCK COMPANY

CONTENTS
Sole Proprietorship
Features of Sole Proprietorship
Partnership
Features of Partnership
Joint Stock Company
Features of Joint Stock Company
Difference
Examples for forms of organizations
Bibliography

SOLE PROPRIETORSHIP
The sole proprietor is an unincorporated business with
one owner who has unlimited liability & is the sole
recipient of the profit or loss incurred by the firm.
It is the simplest form of business with least
government intervention. This is because of the fact
that it is not a legal entity.

FEATURES OF SOLE
PROPRIETORSHIP

Unlimited liability
No government intervention
Quick decision making
Flexible
Single handed
Secrecy maintained
Sole receiver of profit/loss(if any)
Can be operated from home
4

PARTNERSHIP
Partnership is the relation between persons who have
agreed to share the profits of the business carried on by
all or anyone of them working for all. The minimum
members in a partnership firm are 2 and maximum
10(Banking) & 20(General).

FEATURES OF PARTNERSHIP
Sufficient Capital
Divided liability
Risk sharing
Profit distributed
Easy expansion
Specialized skills present
Profit motive

JOINT STOCK COMPANY

A Joint Stock Company has to go through a series of
steps
before
it
commences,
viz.,
Formation,
Incorporation, Capital Subscription & Commencement
of Business.
In case of public company, it has to complete all the four
stages whereas in case of private company, it can start
with its operations after the incorporation stage.

FEATURES OF JOINT STOCK

COMPANY
Artificial person
Separate legal entity
Limited liability of members
Perpetual existence
Common seal
Risk bearings

DIFFERENCE
Sole

Partnership

Minimal Legal
Formalities,
easiest formation

Registration is
optional, easy
formation

Members

Single owner

Minimum- 2
Maximum :
(Banking- 10
Others- 20)

Capital
Contribution

Limited finance

Limited but more

Basis

Formation

Proprietorship

Joint Stock

Company
Registration
compulsory,
lengthy and
expensive
formation process
Minimum
Private- 2
Public Company7
Private Company50
Public CompanyLarge
financial9
unlimited
Resources

Basis

Sole
Proprietorship

Partnership

Joint Stock
Company

Liability

Unlimited

Unlimited and
joint

Control and
Management

Owner takes all

decisions, quick
decision making

Partners takes
decision, consent
of all partners is
needed

Separation
between
ownership and
management

Continuity

Unstable,
business and
owner regarded
as one

More stable but

affected by status
of partners

Stable because of
separate legal
status

Limited