| Sole Trading Concern | Partnership Firm |
| (1) Meaning | Sole proprietorship is owned and controlled by one person. | Partnership firm is owned and controlled by two or more persons called as ‘Partners’. |
| (2) Formation | Sole trading concern can be formed easily. It is started as soon as the owner decides. | Partnership firm is formed by an agreement between two or more persons. |
| (3) Numbers of Members | Sole trading concern is owned by a single person. | Minimum 2 members are needed for starting business. The maximum number is 50. |
| (4) Registration | There is no need for registration of sole trading concern | A partnership firm may or may not be registered. However, it is always desirable for the firm to be registered. It is compulsory in Maharashtra. |
| (5) Secrecy | It is possible to have maximum business secrecy. | Secrecy is shared among all the partners. |
| (6) Liability | Liability of a sole trader is unlimited | Liability of a partner is unlimited, joint and several. |
| (7) Management | The sole trader looks after management of business. He is manager of the business. | All partners take part in management of the firm according to their skills. |
| (8) Capital | The entire capital is contributed by the sole trader, comparatively limited. | Partners contribute capital to the firm, comparatively more. |
| (9) Act/Law | There is no special Act governing the Sole Trading concern. | Partnerships are governed by the Indian Partnership Act, 1932. |
| (10) Sharing of Profit | The sole trader alone enjoys all the profits of business. | Partners share the profits of business as per the ratio given in the agreement. |
| (11) Risk | In this form of business organization, the risk is assumed by sole trader alone. | In partnership firm, the risk is shared by all the partners. |
| (12) Disputes | There is no room for disputes among owners, as there is only a single owner. | There can be disputes among partners. |
