Difference between Partnership Firm and Joint Stock Company

Difference between Partnership Firm and Joint Stock Company

Aspect	Partnership Firm	Joint Stock Company (Company Business)
1. Formation	Formed by an agreement between two or more individuals.	Created by law through a process of incorporation.
2. Legal Status	Not a separate legal entity from its partners.	A distinct legal entity separate from its shareholders.
3. Liability	Partners have unlimited liability, jointly and severally.	Shareholders have limited liability, typically up to the amount invested.
4. Ownership	Owned by a group of individuals (partners).	Owned by shareholders who hold shares in the company.
5. Number of Owners	Typically a smaller number of owners (partners).	Can have a large number of shareholders.
6. Transfer of Ownership	Transfer of ownership may require the consent of partners.	Shares can be easily transferred without affecting the company's operations.
7. Management	Management responsibilities are shared among partners.	Separation of ownership and management; managed by a board of directors.
8. Decision-Making	Decision-making is shared among the partners.	Decisions are made by the board of directors on behalf of shareholders.
9. Capital Contribution	Capital is contributed by all partners based on agreement.	Capital is raised by issuing shares to the public or private investors.
10. Continuity	Continuity can be limited, dependent on the partnership agreement and changes in ownership.	Generally, has perpetual existence, unaffected by changes in shareholders.
11. Accountability	Partners share responsibilities and are mutually accountable.	Shareholders have limited accountability; they are not directly involved in day-to-day operations.
12. Regulation	Less regulatory compliance compared to companies.	Subject to more extensive regulatory requirements and reporting.
13. Public Offering	Typically not involved in public offerings of shares.	Can issue shares to the public through Initial Public Offering (IPO).