What are the similarities and differences between sole proprietorship and partnership?

Sole proprietorship is owned by the individual investor, all the property of the investment enterprise is owned by the investor, the individual bears unlimited liability, and once bankrupt, a person's assets are subject to all debts.

Partnerships are divided into general partnerships and limited partnerships.

The general partners of the general partnership jointly contribute, operate together, and bear joint responsibilities together, and once the company has debts, they will bear unlimited joint and several liability, and the enterprise is jointly owned by everyone.

A limited partnership is composed of a general partner and a limited partner The limited partner cannot contribute capital through labor, does not perform partnership affairs, and does not represent the limited partnership externally Incurred debts The limited partner is liable for the debts of the partnership to the extent of his capital contribution.

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The difference between a sole proprietorship and a partnership is mainly in the nature of the law.

Legal analysis

A sole proprietorship is a company, but a partnership does not belong to a company, that is, a sole proprietorship is an investor's investment, and the property and profits belong to the investor, so it bears unlimited liability for the enterprise, and the property of the partnership is formed by the capital contribution of each partner, and the risk is required to be shared in the joint operation. Therefore, the identification of these two types of enterprises can be based on the above provisions. A sole proprietorship enterprise refers to a business entity established in China in accordance with the law, invested by a natural person, whose property is owned by the investor, and whose personal property bears unlimited liability for the debts of the enterprise.

The partnership as a whole has unlimited liability to creditors. According to the responsibilities of the partners to the partnership, the partnership can be divided into general partnership and limited partnership. The partners of a general partnership are all general partners and are jointly and severally liable for the debts of the partnership.

The business activities of a partnership are jointly decided by the partners, who have the right to execute and supervise. Partners can nominate the person in charge. The business activities of the person in charge of the partnership and other persons shall be borne by all partners.

In other words, the economic actions of each partner on behalf of the partnership are binding on all partners. As a result, disputes between partners are more likely to arise.

Legal basis

Company Law of the People's Republic of China

Article 57 The provisions of this section shall apply to the establishment and organizational structure of a one-person limited liability company; Where there are no provisions in this section, the provisions of Sections 1 and 2 of this chapter apply. The term "one-person limited liability company" as used in this Law refers to a limited liability company with only one natural person shareholder or one legal person shareholder.

Article 58 A natural person may only invest in the establishment of a one-person limited liability company. The one-person limited liability company cannot invest in the establishment of a new one-person limited liability company.

Article 59 A one-person limited liability company shall indicate in the company registration that it is wholly owned by a natural person or a sole proprietorship by a legal person, and that it is stated in the company's business license.

Partnership refers to a for-profit organization established within the territory of China by natural persons, legal persons and other organizations in accordance with the Partnership Enterprise Law of the People's Republic of China, where two or more partners enter into a partnership agreement to jointly contribute, operate in partnership, share income and share risks for the purpose of operating a common business. It includes general partnerships and limited partnerships.

1. A general partnership is composed of more than 2 general partners (there is no upper limit), and the partners are jointly and severally liable for the debts of the partnership.

2. A limited partnership is composed of more than 2 general partners and less than 50 general partners and limited partners, of which there is at least 1 general partner, and when there is only a general partner left in the limited partnership, it shall be converted into a general partnership, and if only a limited partner remains, it shall be dissolved. The general partner shall be jointly and severally liable for the debts of the partnership, and the limited partners shall be liable for the debts of the partnership to the extent of the amount of their subscribed capital contribution.

Sole proprietorship, a form of business. A sole proprietorship, referred to as a sole proprietorship, refers to a for-profit economic organization invested by a natural model and all assets owned by the investor. Sole proprietorship is a very old form of business, which is still widely used in business operations, and its typical characteristics are individual capital contribution and individual operation.

Individuals are responsible for their own profits and losses and bear their own risks, and belong to private enterprises.

Difference Between Limited Liability Company and Sole Proprietorship:

1. Registered capital: limited liability minimum 30,000 yuan; There is no requirement for sole proprietorship;

2. Investors: Limited liability is established by less than 50 shareholders; A sole proprietorship is funded and established by a natural person;

3. Liability: The shareholders of a limited liability company shall be liable to the company to the extent of their subscribed capital contributions; Investors in a sole proprietorship bear unlimited liability for the debts of the enterprise with their personal property.

4. Capital contribution: The initial capital contribution of all shareholders of a limited liability company shall not be less than 20% of the registered capital, nor shall it be lower than the statutory minimum amount of registered capital, and the remaining part shall be paid in full by the shareholders within two years from the date of establishment of the company; Among them, the investment company can be paid up in full within five years. Shareholders may make capital contributions in monetary terms, or in kind, intellectual property rights, land use rights, and other non-monetary assets that can be valued in monetary terms and can be transferred in accordance with the law; However, there is an exception for property that is not allowed to be used as capital contribution as stipulated by laws and administrative regulations.

On the other hand, a sole proprietorship does not have any restrictions on the type, type and duration of the investor's capital contribution.

Article 62 of the Company Law.

A one-person limited liability company shall prepare a financial accounting report at the end of each fiscal year and be audited by an accounting firm.

Article 63.

If the shareholders of a one-person limited liability company cannot prove that the company's property is independent of the shareholder's own property, they shall be jointly and severally liable for the company's debts.

Article 61.

A one-person limited liability company does not have a shareholders' meeting. When shareholders make the decisions listed in the first paragraph of Article 37 of this Law, they shall be in written form, and the shareholders shall sign and submit them to the company.

There are four differences between a partnership and a sole proprietorship.

1. The number of investors and the form of ownership of enterprise property are different. A sole proprietorship is an investment made by a natural person and is an act of a person, and the property of the enterprise is owned by the investor; A partnership is not the act of a single person, it must be established and operated jointly by two or more partners, and the property of the enterprise is jointly owned by the partners and jointly managed and used by all partners.

2. Different responsibilities. A sole proprietorship is an investor's investment, and the property and profits belong to the investor, so he has unlimited liability for the enterprise; The property of the partnership is formed by the capital contribution of each partner, and in the joint operation, it is required to share the risk, and each partner is required to bear unlimited joint and several liability for the debts of the partnership.

3. The management of corporate affairs is different. The investor of the sole proprietorship has the final decision on the management of the enterprise's affairs, and the investor makes its own decision-making on its own. The establishment of a partnership enterprise is premised on the conclusion of a partnership agreement by each partner, and each partner makes joint capital contributions and operates jointly, and the management of enterprise affairs may be jointly carried out by all partners, or by agreement of the partners or decided by all partners, and one or more partners may be entrusted to execute, but major matters are still jointly decided by all partners.

4. Different ways of investment transfer. Since a sole proprietorship cannot be separated, the investor can only transfer the investment or withdraw the capital through a complete transfer of the enterprise or the dissolution of the enterprise; In the case of the transfer of property in a partnership, the partners may either transfer their share of the property in the partnership to other partners or to a third party other than the partners with the consent of all partners, or transfer their property by withdrawing from the partnership.

Legal basis

Article 28 of the Sole Proprietorship Enterprise Law stipulates that after the dissolution of a sole proprietorship, the original investor shall still be liable for repaying the debts incurred during the existence of the sole proprietorship. However, if the creditor only sues the sole proprietorship enterprise when suing the enterprise, if the court suspends the enforcement during the enforcement process, and then the sole proprietorship enterprise is dissolved, and the creditor and the court are not notified at the time of dissolution, and the creditor does not submit a debt repayment request to the investor within five years, the liability will be extinguished and the creditor's rights and interests cannot be realized. When the creditor files a lawsuit against the sole proprietorship, the sole proprietorship and the investor (owner) are listed as co-defendants, and if the enterprise fails to perform the obligations determined in the legal documents during the enforcement process, it can directly enforce the investor's other property.

The repayment of the debts of the partnership by the partners is a supplementary liability, that is, the partners are liable only when the assets of the partnership are insufficient to pay off the debts of the partnership. Partnership property is preferentially used to pay off partnership debts, and personal property is preferentially used to pay off personal debts.