Sole Proprietorship Vs Partnership Registration | Partnership Registration Vs Sole Proprietorship
00:00 Introduction
00:33 What is Sole Proprietorship?
00:51 Benefits Of Sole Proprietorship
01:14 What is Partnership Firm Registration?
01:30 Features Of Partnership Firm Registration
01:55 Difference Between Sole Proprietorship and Partnership Registration
03:28 Which One You Should Choose?
Key differences between a Sole Proprietorship and a Partnership Firm
Incorporation
Both sole proprietorship and partnerships are unincorporated entities, so individual owners are not considered separate from their business operations. They report profits and losses from their business on their tax returns and are personally liable for the debts of their enterprises.
With a partnership, all the partners may be held liable for the business’s debts, regardless of whether one partner incurred the debt without the knowledge or approval of the others.
Tax Exemptions
Tax advantages to the sole owner would enjoy slab benefit unlike partnership and can also claim some deductions under the income tax act.
Although in a sole proprietorship, taxes are lower because the earnings in a proprietorship are considered personal incomes. They may be subject to lower taxes than those imposed on other forms of business ownership.
Bankruptcy
Bankruptcy laws apply differently depending on whether a business is a sole proprietorship or a partnership. Sole proprietorships must file as there is no legal separation between the owner and the business.
Separate Identity
Unlike a partnership, a sole proprietorship is not separate from its owner. In the case of bankruptcy, the sole proprietor is personally liable for any business debt or liability. Therefore, creditors can go after the proprietor’s assets, including homes, cars, personal bank accounts, and other assets that can go toward unpaid debts.
Even if the owner has personal liability insurance, the insurance cannot protect the owner against the creditors’ claims.
Liability
One of the worst parts of a partnership is that you can be held liable for something someone else has done. If someone sues a partner individually, the other partner may not be brought in on the lawsuit, but if the sued partner cannot pay the full amount owed, the courts can take assets of the partner not involved in the lawsuit.
There can also be some incredibly tricky situations when one partner wants to dissolve the business and the others don’t.
Capital requirement
Partnerships may enjoy the advantage of having more access to operating capital. While the sole proprietor may need to rely on financing, such as bank loans, to start and sustain the operation, partners may be able to pool their resources to come up with needed funds.
Sole Proprietorship vs. Partnership can also consider adding another partner who infuses additional investment capital. While the sole proprietor can choose to add a partner if they need the capital, they may have to give up their role as the lone decision-maker.
Skills
A sole proprietor has limited skills and may be unable to control all parts of the business.
Decision-making
One characteristic of a sole proprietorship is that the owner can make all the decisions regarding the operation of the enterprise without having to seek the approval of others. It can make the sole proprietorship a more agile operating structure, where decisions and changes can be made quickly if necessary. With partnerships, infighting and differing opinions may prevent the business from moving forward and jeopardize its existence if the partners cannot resolve their differences.
Risks
The risk connected with the business is comparatively less as it is shared with all the partners. The risk of the sole proprietor is greater than that of a partnership from the business.
► If you need help growing your business check out our Legal Consultant Service @ 🌐 bit.ly/35Ys5QH
► For More Details Contact Us on: ☎️ +91-9810-602-899
► Find Us on
Facebook: 🔖bit.ly/3x3A0bp
Twitter: 🔖bit.ly/3qvYYO0
LinkedIn: 🔖bit.ly/3dqQm65
Instagram: 🔖 bit.ly/3qIvJYT
Google My Business: 🔖 bit.ly/3oOmma5
22 июл 2024
