Difference between company and partnership firm
What is company?
Meaning of company: The word ‘Company’ is derived from the Latin word ( Com = with or together , panis = bread ), and is originally referred to an association of persons who took their meal together. In the leisurely past, merchants took advantage of festivals gatherings, to discuss business matters. Nowadays , the business matters have become more complicated and can not be discussed at festive gatherings. Therefore, the company form of organisation has assumed greater importance. In popular parlance, a company denotes an association of likeminded persons formed for the purpose of carrying on some business or undertaking. A company is a corporate body and a legal person having status and personality distinct and separate form the members constituting it.
Difference between partnership firm and company
|A partnership firm is not distinct from the several persons who form the partnership||A company is a distinct legal person.|
|In a partnership the property of the firm is the property of the individuals comprising it||In a company the property of the firm is the property of the individuals comprising it. In a company|
|Creditors of a partnership firm are creditors of individual partners and a decree against the firm can be executed against the partners jointly and severally||The creditors of a company can proceed only against the company and not against its members.|
|Partners are the agents of the firm. A partner can dispose of the property and incur liabilities as long as he acts in the course of the firms’s business.||Members of a company are not its agents. A member of a company cannot dispose of the company and incur liabilities in the course of the company’s business.|
|A partner cannot contract with his firm.||A member can contract with his company.|
|A partner cannot transfer his share and make the transferee a member of the firm without the consent of the other partners.||A company’s share can ordinarily be transferred.|
|A partner’s liability is always unlimited.||The liability of shareholder may be limited either by share or a guarantee.|
|The death or insolvency of a partner dissolves the firm, unless otherwise provided.||A company has perpetual succession, i.e the death or insolvency of a shareholder or all of them does not affects the life of the company.|
|The accounts of a firm are audited as the discretion of the partners.||A company is required to have its accounts audited annually by a chartered accountant.|
|A partnership firm, on the other hand, is the result of an agreement and can be dissolved at any time by agreement among the partners.||A company being a creation of law, can only be dissolved as laid down by law.|