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Sole Proprietor V/S Partnership Firms - Coggle Diagram
Sole Proprietor V/S Partnership Firms
Sole Proprietor
Ownership
Business solely owned and operated by one individual
Liability
The owner is personally liable for all debts
Decision-making
Owner has complete control over every decision
Profit sharing
All profits go to the sole proprietor
Formation
Established easily and requires minimal legal requirements
Continuity
If owner is to pass away the business ceases to exist
Tax
Income is taxed as personal income of the owner
Partnership Firms
Ownership
Business owned and operated by typically 2-20 individuals.
Liability
Partners usually have joint and multiple liabilities
Decision-making
Decisions are made collectively by all partners
Profit Sharing
Profits are shared among all partners regarding the agreement settled beforehand
Formation
Requires agreement across all partners and involves more legal requirements
Continuity
Depending on the agreement constructed, firm may continue to exists despite a partners resignation or death
Tax
Taxed at partnership level, all partners pay tax based on their share