Difference Between Partnership and Private Limited Company

[Mika]

Partnership is a business owned by more than one individuals. Private Limited Company has multiple shareholders, thus making it multi owner business. So, what set partnership and private limited company apart? Both are popular business models among small and medium-sized enterprises with limited staff and capital. However, they differ significantly. While both partnership and private limited company can start small, a private limited company has the potential to expand and even launch an IPO and become publicly traded. Partnership businesses are registered with the trade and commerce department, whereas companies are registered with the company registrar's office. Partnership business can transition to private limited company.

 

[Nite]

Partnership businesses are relatively easier and less costly to set up compared to private limited companies. On the other hand, private limited companies are separate legal entities distinct from their owners. While both partnership and private limited company can start small, a private limited company offers greater growth potential, limited liability for shareholders, and the ability to raise capital through share issuance. Partnerships, on the other hand, offer simplicity in formation but come with unlimited personal liability for partners.

 

[Etini]

A partnership business is not regarded as a legal entity by the law whereas a private limited company is seen a as a legal entity and can be sued and also sue independent of shareholders who are the owners. A partnership business is not required by the law to publish it's financial statements publicly while a private limited company is under obligation to publish it's financial statement publicly. And lastly, a private limited company has it's owners not to be held responsible for the liabilities of the business while a partnership business has the owners responsible for the liabilities of the business.