What is the difference between Partnership and Sole Proprietorship for of business ?


The difference between a partnership and sole proprietorship form of business may be follows. This helps the entrepreneur in selecting form of business of his choice.


Partnership is owned by two or more persons subject to the limit ten in banking business and twenty in case of other business. Sole proprietorship is owned by one and only one person.



It is formed through an agreement which may be oral or in writing, is formed quite easily as it is the outcome of a single person’s decision without any legal administrative approval.


The registration is not compulsory. It needs no registration excepting some compliance.


Regulating law:

It is governed by the rules contained under the Indian Partnership Act, 1932. There is no specific statutory law to govern the functioning of sole proprietors!^ business.


There is more scope for raising a larger amount of capital as there < more than one person. It has a limited financial capability. Hence, the scope for rising capital is naturally least.



Every partner has the right to take active part in the management the affairs of the business. Each partner also enjoys the authority to bind the firm and other partners for his acts in the ordinary course of business. The sole proprietorship is self-managed one and few employees may support him. However, the decision of the proprietor is final and binding.


The risk connected with the business is comparatively less as it is shared all ,the partners. The risk of the sole proprietor is greater than that of partnership form business.



It continues as long as the partners desire. Even though legally it co to an end on the death, insolvency or retirement of any of the partners, the business i continue with the remaining partners. It comes to an end with the death, insolvency incapacity of the proprietor. Thus, there is uncertainty of duration of sole proprietorship

Quickness in decision-making:

Decision-making in partnership is corporately delayed as the partners arrive at decision after the consultation with one another. The decision of the sole proprietor is prompt as he need not consult anyone.


Maintenance of secrecy:

Maintenance of absolute secrecy is not possible in of partnership as business secrets are accessible to more than one partners. The sole proprietor need not share his business secrets with anybody.


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