Difference between Proprietorship and Partnership

 
Meaning:
a. Proprietorship:

Proprietorship or popularly known as sole proprietorship is that type of business, which is run by single person. Management of the business is in hand of single person. He looks after the business, he brings capital, he takes risk, and he enjoys profit. He has not to ask other person or partner for his consent before taking any business related decisions. For example: if we start our business at our own without keeping any partner or co-owner, its sole proprietorship. Success or failure of business is responsibility of the single person. The sole proprietor has exclusive control over management decisions and operations and he reports all profits and losses in his personal income tax return and is personally liable for business debts and obligations. When the sole proprietor dies or stops doing business, the business no longer exists.

Formation process:

There are no such any formation process to register a proprietorship. Any can start a proprietorship business but he will have to obtain licenses or permits related to the trade or business, he is engaged in. Though there are no process specifically provided for registration of proprietorship, but yes to open current account or to get sales tax registration or any other licenses, you may have to produce any documentary proof of registration and existence of your proprietorship. For this, people have to get trade license or registration under shop and establishment act so that they can use the license or certificate as documentary proof of existence of proprietorship.

b. Partnership

Partnership is that form of business which is carried out by two or more persons jointly. Two or more persons for carrying out any profitable business enters into a contract and forms a partnership. Formation, management and regulation of any partnership is governed by Indian Partnership Act. Success or failure of business is responsibilities of all partners.

Formation Process:
To form a partnership, two or more persons have to make an agreement of partnership on non judicial stamp paper. They have to sign on the agreement and get it notarised. After attestation of partnership deed by notary public, they have to apply for pan card of partnership. Once they get acknowledgement of pan application they can open current account in name of partnership and start their business.

 
Difference between Proprietorship and Partnership
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