United Kingdom Company Law – Introduction

4 Differences between company and partnership

Differences Company Partnership
Formality Company is a formal arrangement of people may or may not work together. Partnership is an informal arrangement of people working together but some formalities exist in it.
Legal position or existence Company is a separate legal entity separate from its members or owners. Partnership has no legal existence outside the boundary of its members.
Size Unlimited number of members so size is from small to high. Generally traditional partnership has limited number of members.
Addition of member When new member enters in the company then no effect on ownership structure. Usually partnership dissolved when new partner enters.
Assets Company has its own assets as it has its separate identity. While assets in partnership are jointly owned by the members.
Monitory benefit Monitory benefit is given in the form of dividend to members in company Benefit is given in the form of profits.
Liability Members’ liability is usually limited. Members liability is usually unlimited.
Management In company mostly owners/members are separate from management (two directors for public Co) In partnership all the partners can participate in the management.
Constitution A company must have written constitution. Partnership has a written partnership agreement of deed.
Capital Company can raise capital by issuing shares to its members. Partners have their own investment.
Withdrawal of capital There are more strict rules for withdrawal of capital and its repayment. It is easier to withdraw capital/investment in partnership.