Difference Between Partnership and Company

These two terms differ in their meaning, but both of them are related to each other. The Partnership is not a different legal authority. Rather a Company is a purely different authority that is legal.


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A Partnership is the association of more than one member. Rather, a Company is an association of all the people who are related to different sectors involved in a Company.

Partnership vs Company

The difference between partners is not considered as a legal entity, but a company is a legal entity. Two people can form a Partnership and have unlimited liability. A Company has limited resources. A Partnership should have a Partnership deed, but a Company should have a memorandum of association. These documents are mandatory.

Partnership vs Company

A Partnership also needs management like a company. It has no board of directors, but the partners have the authority to look after the management of their firm.

They do have to get the approval of the central government like a Company. It does not have to take any limited after their name of an association-like company.

A Company has a board of directors who maintains management in the Company. A company has to work according to the approval given by the central government.

A Company cannot change its name whenever they want to. A company always has a common goal. A company is considered as a person.

Comparison Table

Parameters of ComparisonPartnershipCompany
Highest AuthorityPartnersShareholders
Legal DocumentPartnership DeedMemorandum Of Association
Limited LiabilityNoYes
SealNot requiredRequired
Addition of limitedNot necessaryNecessary
LawIndian Partnership Act,1932Indian Companies Act,2013
Government State GovernmentCentral Government

What is Partnership?

A partnership is a group of more than one person. It should have a partnership deed to maintain the partnership.

The partners have the sole authority to look after the management of their association. It does not have to take any limited after their name of an association-like company.

A partnership can be between two parties or multiple parties, which can involve government or any non-profit organization. There are three types of partnerships available. Firstly, general partnership states that all the partners have to equally share the profits and debts.

Secondly, limited liability partnerships state that the mistakes of another partner will not affect the other person. If one of the partners is found guilty of any malpractice, then the other partners will never be at risk. They can continue with their work.

The law makes some distinctions between the partners. Thirdly, limited partnerships are formed with a touch of both general and limited liability partnerships. Here there are two kinds of partners which are a general partner and a silent partner.

A silent partner is a person who has a limited amount to invest in the association. India has an act under which partnerships fall under. This act is known as The Indian Partnership Act 1932.


What is Company?

A company is an organization of all kinds of people who are related to different sectors related to the organization. The company has to register its name with limited.

The private company has to end with private limited whereas general has to complete with limited. They need to register themselves in the central government.

They have to follow the Indian Companies Act,2013. The company should have a seal. They need to have an important document which is known as a memorandum of association. Once registered, the company cannot change its name.

A company always has a common goal. A company is considered as a person. A person has the right to buy the property and can register a case about another person; likewise, a company can also so a company is considered a person as an artificial.

A company does not have to pay any debts if any person of their organization is unable to. It is a particular entity and separates from the members.

The shareholders have limited liability in the company till their share price only. A company seal or a stamp is important to legalize any document in the name of the company.

A stamp should include the name and address of the company. It is the signature which company will use in all the documents related to the company or any work related to the company.


Main Differences Between Partnership and Company

  1. The partnership has partners in the firm, whereas Company has shareholders in their firm.
  2. A partnership deed is important in Partnership, whereas a memorandum of association is needed in Company.
  3. There is no restriction in liability in a Partnership, but it is limited in a Company.
  4. A seal is important in Company but not in Partnership.
  5. A company has to write limited after their name of the company, but a partnership does not require to add limited with the name of their organization.
  6. Partnership deed maintains accounts in the partnership, but a chartered accountant maintains accounts in the company.
  7. The partnership follows the Indian Partnership Act,1932, but Company follows the Indian Companies Act,2013.
  8. The state government looks after partnerships, but the central government looks after the company.
Difference Between Partnership and Company


  1. http://thecommonwealthpractice.com/InGoodCompanyReview.pdf
  2. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-0262.2006.00719.x
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