What are the difference between Partnership and Sole-Trade Business?

The difference between Partnership and Sole-Trade Business.

The Distinguish between Partnership and Sole-Trade Business are:

Membership: Partnership is owned by two or more persons known as partners.


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Agreement: To constitute a partnership, an agreement is required in the form of a partnership deed. The agreement among partners may be express or implied.

Registration: A partnership concern needs registration to get certain advantages of registration. Though registration is not compulsory but non-registration bars it from taking legal remedies.

Management: All partners have equal rights and all of them can participate in the management. They can bin the business by their acts.

Risk: The business risk is shared by all the partners in proportion of their shares.


Capital: All the partners contribute towards capital of the firm. The partners pool their resources to run the business efficiently. However, there is no bar on a person becoming a partner without bringing any capital.

Secrecy: The secrets of the business are in the knowledge of all the partners; so there is a fear of leaking them out.


Membership: Sole-trade business is owned and controlled by only one person. If a second person joins then it becomes a partnership.


Agreement: A sole trader does not require any formality to start the concern. There is no need of agreement in this business.

Registration: No registration of a sole trade business is required except under ships and Establishment Act.

Management: This business is controlled  by one person only. His order is a law and he is the final authority in the concern.

Risk: The whole risk is shared by the sole-trader.

Capital: Only the resources of one person are used in the business. He may suffer from shortage of capital because the resources of one person will generally be limited.

Secrecy: There is a complete secrecy in the business because the owner does not share the secrets with anybody else.

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