The Difference Between Joint Stock Company and Partnership Firm

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In the business world, there are many terms that are used interchangeably. A few of the most common are Difference between joint stock company and partnership firm. Both are types of business ownership but the differences between them are significant. This article aims to assist Commerce students develop a clear idea about the difference between the two different entities.

What is the difference between a joint stock company and a corporation?

Partnership firms are formed by a mutual agreement between two or more individuals to share profit and losses in a proportional manner. The partners can contribute any property or skill, and they share in the management of day-to-day operations. In most cases, there is a written agreement that defines the responsibilities of each partner and how profits and losses will be distributed.

On the other hand, a joint-stock company is an incorporated business that is owned by its investors. Investors have the right to buy and sell their ownership stake in the company largely at will. The owners of a joint-stock company are also responsible for its debts and liabilities, which are generally limited to the value of their shares.

In a partnership, the number of members is restricted to a minimum of two and maximum of 20. It is not easy to transfer the share of a partner to another person without the consent of other partners. This restriction can limit the liquidity of the investment. In addition, partners are usually liable for the full amount of any debts that the firm may incur.

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