Mostly peoples confused between Company and Firm. We’ll discuss about the difference between a Firm and a company in India in this article.
What is a company?
If we talk about trade or business, they have many forms, of which the company is also one. If we talk about the company, then any business organization should be formed and formed under the Companies Act and its total capital is divided into small parts. The company is called. The company can only be established, operated, and closed by law. The company is always formed and registered under the Indian Companies Act 1956 and 2013
These are the main four pillars of the company.
- The director
Mainly there are some types of company –
- One Person Company
- Limited Liability Partnership
- Nidhi company
- Private limited company
A partnership or partnership is a form of business organization in which two or more individuals together form a business relationship, in which all constitute a business venture to make a profit. And, all those individuals who do business together are collectively named as the firm. The firm is subject to the decisions of the Indian Partnership Act, 1932.
What are the differences between a Firm and a company?
Difference between the firm and a company:
- No personal rights of its members are considered on the property of the company, whereas the partners of the firm have personal rights over the assets of the firm.
- It is mandatory for a company to take company registration in India under the Companies Act, while a firm does not have to register the company; it is required to be registered under GST.
- In the company, the members are given importance only to a certain extent whereas the members in the firm are given a lot of importance.
- The creditor in the firm is also the personal creditor of the firm and the other members and if for some reason the firm is unable to pay it, the creditor is able to stake his claim on the personal assets of the members of the firm whereas the creditor in the company is, in any case, of the members. They cannot exercise their right over personal property.
- A partner does not have any contract with his firm while the company maintains a contract with its members.
- No member in the firm can sell his share to anyone else without everyone’s permission whereas a member in the company can sell his share to anyone without everyone’s permission.
- Any partner is able to dispose of the assets of the firm as per his own, meaning he can sell and buy them for the firm, but a member of a company is not able to do so.
- The obligations of the company’s position in the company are generally limited and the firm’s unlimited.
- The agreement between members in the company is in a public firm while the firm has a private form.
- It is mandatory for a company to file LLP Annual compliances every year. And for a firm, they need to file quarterly, monthly, and yearly returns under GST.