Trust vs Company: Difference and Comparison

Some organizations act as profitable enterprises which provide beneficiary services to customers in exchange for money. Other groups are non-profit, such as those in charge of social services or businesses with the concept of no profit or no loss.

Trust is a business entity that can be lucrative or non-profitable. On the other hand, a company is an entity that delivers services to clients by earning profit from them.

Key Takeaways

  1. A trust is a legal arrangement where a trustee manages assets to benefit beneficiaries, whereas a company is a separate legal entity owned by shareholders.
  2. Trusts primarily focus on asset protection and estate planning, while companies engage in business activities to generate profit.
  3. Trusts do not have a separate legal identity, unlike companies, which can own property, enter contracts, and sue or be sued.

Trust vs Company

The difference between a trust and a company is that a trust is a non-profit corporation classified as a non-government organization (NGO) under the fiduciary concept.  On the other hand, a company can be either governmental or private to provide goods and services to the customers to earn the requisite profit.

Trust vs Company

A trust is formed under section 3 of the Indian trust act of 1882(ITA). Under this notion, a trustor decides, under the supervision of a legal person, to transfer his earnings to a trusted person who can utilize them to benefit others.

It can be privately owned or owned by the government, which holds a 51 percent share. The firm owner’s goal is to sell products as well as make money to have higher turnovers.

Comparison Table

Parameters of ComparisonTrustCompany
Owned byIt is owned by the trusteeIt is owned by the owner of the company, who holds a maximum stake.
Under ActIt is formed under the Indian Trust Act.It is formed under the Indian Company Act.
EarningIt earns no profit.It aims to earn money in terms of profit.
Type of organizationIt is a non-governmental organization (NGO).It can be a governmental or private firm.
Minimum number of membersTo form trust, at least two members must be present.A government company needs at least seven individuals, and a private one needs a minimum of 2.

What is Trust?

A trust is a legal entity established by a trustor (who wishes to donate his assets) in trust for a trustee (who oversees the organization) with legal help. Trustor opens such an organization to benefit the third party.

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It was established by the Indian Trust Act of 1882, which mandates a written contract known as an instrument of trust when transferring assets to the trustee.

A trustor must specify the goal of founding a trust organization along with his intention when organizing a trust. In addition, remittances must be made on behalf of a trustee who is eligible to receive salary under Article 6 of the Trust Law of India.

Starting with a revocable trust that allows changes can be made in the trust while the owner is still alive. As for irrevocable trusts, they cannot be amended once they have been formed with all legalities.

In the public trust, the beneficiaries, such as the poor or illiterate, benefit. Private trusts are created for individual beneficiaries rather than the public, and unlike public trusts, they are nearly always ephemeral.

What is Company?

It means that it can be owned by the government or even a private individual who meets all the ICA’s legal requirements.

Developing any company aims to supply a wide range of goods and services to customers, such as daily necessities, luxury items, or other services, in exchange for money and profit.

According to the laws for running a business, if the government wants to operate a company, it must have seven or more employees. At least two employees are necessary to create a private corporation.

Private corporations have the advantage of requiring no minimum capital to establish and display an individual’s financial standing.

The group or individual with the highest ownership in the company owns all the tangible (cash, building, and vehicle) and intangible (patents, copyrights, and goodwill) assets. The owner is also responsible for the environment.


Main Differences Between Trust and Company

  1. The trust aims to provide advantages to a third party (beneficiaries). The advantage of starting a company is that it benefits customers, employers, and the boss.
  2. Annual filing of returns is not required under the trust. However, to avoid legal action, companies must file a yearly return.
Difference Between Trust and Company
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Last Updated : 13 July, 2023

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9 thoughts on “Trust vs Company: Difference and Comparison”

  1. There are some valid points in this post, but I think it failed to address certain aspects of the differences between a trust and a company.


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