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Distinguish between partnership firm and joint stock company

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In this form of business organization two or more persons come together to undertake a business activity and share profits. It is voluntary association of individuals for profit having capital divided into transferable shares, the ownership which is the condition of membership. There can be a minimum of 2 partners and a maximum of 10 partners in banking business and 20 in non-banking business. The minimum of number of members are 2 in private limited company and a maximum of In a public limited company, minimum number of members is 7 and there is no maximum limit.

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Distinguish Between – Partnership Firm and Joint Stock Company

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A company that operates its business by getting combined capital, limited liability, having a distinct personality and perpetual succession by law is called a Joint Stock Company. On the other hand, two or more persons taking unlimited liabilities for the purpose of earning a profit, being operated by all or by one on the behalf of all on the basis of the agreement is called partnership business.

Though both businesses are formed by many people, there are many differences between them as well because of the characteristics and the fields of operations or floors of functions are as follows:. From the above discussion, we can say that there are vast differences between the two types of business and hence anyone should study in detail the pros and cons of both companies as well as a partnership before taking any decision on whether to enter into a partnership or incorporate a company.

Joint Stock Company is a large, up to date perpetual succession and all over recognized business organization. On the other side, the Partnership business is a small and medium business organization confined by various limitations and operated on the basis of agreement. Differences between Joint Stock Company and Partnership Business A company that operates its business by getting combined capital, limited liability, having a distinct personality and perpetual succession by law is called a Joint Stock Company.

Though both businesses are formed by many people, there are many differences between them as well because of the characteristics and the fields of operations or floors of functions are as follows: Joint Stock Company Formation: A company can be formed only after fulfilling legal formalities and its incorporation under the Act is essential.

A joint-stock company is created by registration under the Companies Act- Legal Status: A company has a separate legal entity independent of its members.

A joint-stock company is a legal person and regarded by law as having an Artificial Personality. A number of members: A private company must have at least two members and a maximum of 50 members. Contractual Capacities: The shareholders of a company can enter into a contract with the company and can be employees of the company.

Statutory obligations: A company is required to comply with various statutory obligations regarding the management e. Liability: The liability of a member of a company may be limited by shares or by guarantee. Mutual right: The members of the Board of Directors are elected by the direct polling of the vote of the shareholders. Profit Distribution: Profits in the case of a company can be distributed according to the provision of the articles of the company act.

Audit: Audit in the case of a company is compulsory. A company must maintain its accounts in the prescribed form and must get them audited by a qualified auditor. Partnership Business Formation: In the formation of partnership no legal formalities are involved and registration of the firm is not compulsory.

A partnership is created by an agreement that may be expressed or implied from the conduct of the partners and is subject to the Partnership Act-I Legal Status: Partnership is not a legal person and partnership is the partners who own the property of the firm and liable for the contracts of the partnership firm jointly.

A partnership firm has no separate legal entity different from its partners. Partners and the firms are one and the same in the eyes of law. The number of members: A partnership consists of a minimum of 2 and maximum of 20 persons maximum 10 persons for banking business. Contractual Capacities: Partners can contract with other partners but not with the firm as a whole. Statutory obligations: In the case of a partnership, there are no statutory obligations in the business activities.

Liability: The liability of a canner is unlimited. Mutual right: A little formality is needed to elect the Board of Directors.

Sometimes partners are responsible for conducting business activities. Profit Distribution: Profits of a firm are distributed in agreed proportion or equally in the absence of agreement among the partners. Audit: In case of partnership firm audit is not compulsory.

Accounts and audit are not obligatory for a partnership unless the total sales turnover or gross receipts in a year exceed Money amount. Share This Post.

Distinguish Between Partnership Firm Joint Stock Company - Organisation of Commerce and Management

A partnership is an association of two or more than two persons who have combined together to share the profits of business carried on by all or any of them acting for all. Partners are basically persons who own the partnership business individually. It sometimes happens when one partner provides the major portion of the capital and the others contribute their skills i. Partnership agreement is a document in which all the terms and conditions of partnership are mentioned.

The company form of business organization enjoys a number of benefits over the partnership. This is due to the fact that, in a partnership firm, there must be at least two persons, mutually agree to run the business and share the profits or losses in a manner prescribed in the agreement.

An association engaged in a business for profit with ownership interests represented by shares of stock. A joint stock company is financed with capital invested by the members or stockholders who receive transferable shares, or stock. It is under the control of certain selected managers called directors. A joint stock company is a form of partnership, possessing the element of personal liability where each member remains financially responsible for the acts of the company.

Differences between Partnership Firm and Joint Stock Company

Partnership Firm Joint Stock Company. Basis of Difference. Partnership Firm. Joint Stock Company. In this form of business organization two or more persons come together to undertake a business activity and share profits. It is voluntary association of individuals for profit having capital divided into transferable shares, the ownership which is the condition of membership. There can be a minimum of 2 partners and a maximum of 10 partners in banking business and 20 in non-banking business. The minimum of number of members are 2 in private limited company and a maximum of In a public limited company, minimum number of members is 7 and there is no maximum limit. The formation is comparatively simple and less costly.

Joint Stock Company

We can distinguish between partnership and joint stock company by the following ways : 1. Formation :- Partnership : It is formed by a written agreement. Joint stock company : It is formed under the company ordinance. Members :- Partnership : Minimum 2 and maximum 20 members in the partnership.

A company that operates its business by getting combined capital, limited liability, having a distinct personality and perpetual succession by law is called a Joint Stock Company.

The following are some of the differences between a Partnership firm and Joint Stock Company. Minimum number of members is two in a Partnership firm. Whereas in Joint Stock Companies, Minimum number is two in a private company and seven in a public company.

Difference Between Partnership Firm and Company

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SEE VIDEO BY TOPIC: difference between partnership firm and joint stock company CA ICAP

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What is Partnership? How does it differ from a joint stock company?

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Dec 26, - 2. Membership, Partnership firm owned by two or more and maximum 10 in banking and 20 in other firms, In private limited company minimum of  1 answer.

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Comments: 3
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