July 02, 2012

Differences Between Sole Trading Concern And Partnership Firm

Both sole trading concern and partnership firms are two different forms of business organizations. Sole trading concern is run by a single owner but partnership firm is operated by two or more than two people. There are various differences between sole trading concern and partnership firms in terms of membership, raising of capital, management style, secrecy, profit sharing etc.

The main difference between sole trading concern and partnership can be discussed as follow:

1. Membership

Sole trading is owned, managed and controlled by single person. Partnership has two or more members which are called partners.

2. Agreement

Sole trading does not require any agreement. Partnership is based on agreement among partners.

3. Capital

The owner contributes capital for sole trading. All partners contributes capital in partnership. Scale of operation is small in sole trading compared to partnership.

4. Management

The owner is the manager in sole trading concern. In partnership, all partners participate in management.


5. Risk

The owner bears all the risks in sole trading. The risk is shared by all partners in partnership.

6. Profit sharing

All profits belong to the owner in sole trading. In partnership, profit is shared among partners as per agreement.

       Also Read:

7. Secrecy

The owner keeps all secrets to himself in sole trading. Secrecy is shared among partners in partnership.

8. Flexibility

Sole trading is one man show. It has greater flexibility for change. Partnership has less flexibility. Consent of all partners is needed to make changes.