Difference Between a Partnership Company And a Pvt Ltd Company

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Difference Between a Partnership Company And a Pvt Ltd Company

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However, there are two among them that are suitable for almost any kind of business. One involves partners, and it’s called a partnership firm, and the other Is called a Pvt ltd company or a Private Limited company. Budding minds are still confused about which one to choose. Well, if you are one of them, yours will be long gone once you’re finished reading this article.

What is a partnership company?

Despite the title of this article, there is no such thing as a partnership company, there is just the partnership firm. It’s a business entity that consists of two or more individuals coming together, agreeing to work in tandem towards generating profit. A partnership consists of:

  1. A partnership agreement, which can either be timed or un-timed, depending upon the duration of the partnership.
  2. The firm does its functions as specified in the partnership agreement.
  3. A limited liability, where the partners have to bear the complete brunt of the firm losses.

Suited for all kinds of businesses, a partnership firm is amazing if you want to run a family style business.

What is a Private Limited Company?

A Private Limited Company is a business entity that, like a partnership firm, is run by two or more individuals. These individuals are known as directors. However, together, instead of a collective, they establish a separate legal entity known as a private limited company. A private limited company consists of both shareholders and directors. A private limited company consists of:

  1. Memorandum of Association, which states the object of the company, as well as information about the directors and shareholders.
  2. Articles of Association, which state the rules and regulations that a company has to follow.
  3. A specific PAN card of the company, giving it a separate entity.
  4. Limited liability, protecting the personal assets of the director in the event the company goes through loss.

Difference between partnership and a private limited company

The difference between a partnership firm and a private limited company can therefore be condensed into the following points:

  1. A private limited company offers you limited liability while that’s not the case with a partnership firm.
  2. A private limited company is a separate entity from its directors unlike a partnership firm that represents the collective of partners.

Conclusion

So, in the end, you might be facing the question, which one is better? Well, what are your preferences? Both of these have the ability to take your business upwards and make it sore. However, if you want a safer approach towards success, go with a private limited company.

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