Q: What are the differences between company and partnership firm ?

 Ans: 

1. Partnership firm requires partnership deed whereas incorporation of company requires memorandum of association and articles of association.  


2. A member whose name is entered in the register of members of company is member of company. It is not mandatory that the member will be the the shareholder. The minimum number of members in the partnership firm are 2 and minimum number of members for private limited company are 2 and minimum number of members for public limited company are 7 and one for one person company. 


3. The maximum number of partners in partnership firm are 100.  The maximum number of members in private limited company are 200 and maximum number of members in  public limited company are unlimited. 


4.  The company comprises of members and directors.  Thus minimum number of directors as per section 149(1) of companies act are 2 in case of private limited company and 3 in case of public limited company and one for a one person company and the maximum number of directors can be 15 but by passing a special resolution.  


5. The minimum paid up capital required for private limited company is Rs 1 lakhs and minimum paid up capital required for public limited company is Rs 5 lakhs.  No such amount is required for partnership firm.  

The Companies Act, 2013 earlier mandated that all Private Limited Companies have a minimum paid-up capital of Rs.1 lakh. This meant that Rs.1 lakh worth of money had to be invested in the company by purchase of the company shares by the shareholders to start the business. However, the Companies Amendment Act, 2015 relaxed the minimum requirement for paid-up capital. Therefore, there is now no requirement for any minimum capital to be invested to start a private limited company.



6. No audit is required for sole proprietorship firm and audit is required for partnership firm. 

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