Difference Between Company and Partnership

First time entrepreneurs who are entering into the corporate world are confused about how to go into the business whether as a company or as partnership. Understanding the differences between the company and partnership can be helpful to them in making the right decision –

Differences between Company and Partnership

Legal Person

A company is considered to be an artificial legal person, hence a company may make contracts and take legal action against others and others also can take legal action against the company. It is an entity which is distinct from its members, while partnership is not a legal person and in partnership it is the partners who own the property of the firm and are liable for the contracts of the partnership firm jointly as well as severally.

Liability in case of Insolvency

In a company liability of the members of the company is limited to the extent of shares held by him and hence insolvency of a company does not mean insolvency of the members of the company while in case of partnership liability of the partners is unlimited and hence their personal wealth can also be taken for paying the debts of the partnership firm and hence insolvency of partnership firm means insolvency of partners as well.


While dissolving a company strict rules and regulation are needed to be adhered to while in case of partnership it can be dissolved by partners at any time with mutual consent. In other words it is easier to close a partnership firm then a company.


A company is managed by board of directors which are elected by the members of the company while a partnership firm is managed by all partners or any one of them on behalf of all of them.

Perpetual Succession

A company has perpetual succession implying that death or insolvency of member does not have any bearing on the existence of the company and it keeps functioning while a partnership firm does not have perpetual succession and is dissolved on death or insolvency of any partner subject to the contract to the contrary.

Hence from the above it can be seen that there are vast differences between the two and hence any one should study in detail the pros and cons of both company as well as partnership before taking any decision on whether to enter into partnership or incorporate a company.

15 comments… add one
  • Lucita

    Good Source for study material

    • budeba

      i really appreciate the answers given they are so useful

  • rizvi



    its really a good material that is clearly understood.

  • adekola

    I am satisfied.

  • damaris

    well explained and understandable

  • Mannan Khan

    vey well crafted answer…!!

  • Rose elias

    Very well explained big up

  • Dilwar Hussain

    Those articles are very helpful for understanding the subject concern. Thanks for keeping such metarial.

  • Emelda Amankwa

    Thanks very much.It was well explained.

  • adewuyi

    nice write up keep it up

  • spence

    what is partnership

  • Ukaibe Gift

    one who wants to embark on business have to make use of these informations; they are helpful even for business student.


    that is a nice one for accedemic excellence ok

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