This article describes the differences between Corporation and Partnership Firm.
Corporation / Company
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In the eye of the law, it is a legal person.
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The members of the company are called “shareholders”.
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The administration of the company shall be maintained by the directors, managing directors, who are directed by the shareholders.
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The shareholders of the company have no liability or rights over the debts, properties, losses, etc. of the company except to the extent of their share capital. Their personal properties are not liable for the loss of the company.
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If one or more shareholders die, the company continues its existence. It will survive until the last shareholder remains in existence.
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It has permanent legal entity.
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The shareholders have no such liability of agency. They are liable to the extent of their share amount only.
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It can accumulate more money and can perform vast business than a partnership firm.
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Criminal provisions are imposed by the companies Act on the defaulting executive body of the company.
Partnership Firm
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In the eye of the law, it is not a legal person. It has no legal entity.
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The members of the partnership firm are called “partners”.
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The business of the partnership firm is maintained by the partners themselves.
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The debts, properties, losses of the firm are the debts, properties, losses of the partners too. Their personal properties are also liable to be attached.
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If a partner dies, the partnership firm shall have to dissolve. A new partnership firm is formed.
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It has no such permanent legal entity.
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The partnership firm is based on the principle of “agency”. One partner is liable another partner’s acts in connection with the firm’s affairs.
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Its sphere to accumulate the capital and its business are very limited.
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There are no such criminal provisions in the partnership firms.