A Partnership firm and joint stock company is a group of individuals with common business goals and objectives. The partners share the risk and rewards of running a business with the help of each other. The primary responsibilities of each partner include providing capital, technical and management skills, and other resources. The partners also share profits according to their contributions. There are several advantages of forming a partnership, including tax benefits, legal protections, and easy access to funding. However, this type of business has a number of disadvantages as well, including limited liability, and the inability to raise significant amounts of capital.
What is the difference between a partnership firm and a company?
A joint stock company, on the other hand, is a legally distinct entity. The company has a separate legal identity from the persons involved in it and thus can own assets and can be sued by others. It is an artificial legal person. As the name suggests, the company is made up of shares that can be bought and sold by shareholders. This allows the transfer of ownership of the company without affecting the continuing existence of the company.
Joint stock companies also have many other advantages that make them a popular choice for businesses. For example, their ability to access large sums of money through numerous shareholders allows them to pursue projects that might be beyond the financial capacity of other business structures. Also, their limited liability means that shareholders’ personal possessions are protected from being liquidated to pay for the debts of the company.