Difference Between Partnership and Sole Proprietorship

What is the main difference between a partnership and sole proprietorship?

Choose the answer:

A partnership involves multiple owners sharing the ownership and responsibilities of a business.

A sole proprietorship involves a single individual owning and operating the business.

Final answer:

A partnership involves multiple owners sharing the ownership and responsibilities of a business, while a sole proprietorship involves a single individual owning and operating the business.

Explanation:

The main difference between a partnership and a sole proprietorship is that in a partnership, two or more people own the business, whereas in a sole proprietorship, one individual owns the business.

In a partnership, the owners share the profits, losses, and responsibilities of the business. They also contribute capital and have joint decision-making authority. In a sole proprietorship, the owner is solely responsible for all aspects of the business, including financing and decision-making. They also keep all the profits.

For example, if two friends start a business together and split the ownership and profits equally, it would be a partnership. On the other hand, if an individual opens a small bakery on their own, it would be a sole proprietorship.