Question

Question To

Give a thorough comparison about the benefits and drawbacks of these two business vehicles (Partnership and limited Company) in about 650 words.

Answer 1

Comparisons about Benfits and Drawbacks of Partnership and Limited Company

Basis of Comparison	Partnership	Limited Company	Comment
Separation in Ownership and Control	The control and management in Partnership firm is both with the partners. This enable better understanding and profits as owners work hard to generate more revenues.	There is a separation between ownership and management in limited company. The ownership lies with the members, whereas management is done by board of directors. Directors of the company may not work hard as their remuneration is fixed.	Partnership is more better in this comparison basis as there is centralisation of ownership and management.
Liability	Partner have unlimited liability towards their creditors. If the assets of the partnership firm is not sufficient to repay creditors entirely, partners will pay for such insufficiency.	The liability of members is limited in case of company. Members are liable to the extent of their unpaid capital amount.	Limited liability is more preferred for this comparison basis. As, the liability is limited of the members. Members are not required to worry about their liability.
Legal Formalities	There are no such formulation and winding up formalities in this case. Only Partnership deed is to be prepared by partners and need to be duly registered.	Lots of formalities, paper work and documentations is required in limited company. Moreover, formulation and winding up procedures and formalities are also very complex.	In terms of legal framework, Partnership firm is far more better than limited company s there is lot more formalities as compared to partnership.
Separate Legal Entity	Partnership firm is not a separate entity from its partners. It cannot sue and own property in its own name. All the contracts are entered in the name of partners rather in the name of partnership firm.	Company is the separate legal entity in terms of it can sue and be sued by other parties it can own properrties in its own name it can enter into contract in its own name. Further if there is any dispute arises, company in its own name will be held responsible. In certain exceptions, person-in-office may also be held responsible.	Company is much better in this case. Company will be treated as a separate artificial person in the eyes of law. Further, all the transactions will be entered and properties owned in the name of the company.
Registration	Voluntary Registration in case of partnership. However, if the partnership is not registered it shall not be considered as a conclusive evidence in any case.	Mandatory Registration is required in Limited Company. With required minimum members and limited to maximum members, company needs to mandatorily registered within its respective jurisdiction.	Registration should be done in each case. Thedifference is that it is voluntary in case of Partnership firm and mandatory in case of Company.

There is no hard and fast benefits and drawbacks of either entity. Each form of entity hs its own beenefits and drawbacks. In some cases Partnership form is better and in some cases cases Limited Company is better. The need to properly formulate policies and startegies to take your business to higher level.