Difference between Company, Trust and Partnership Firm

There are many sorts of organization that they are doing distinctive businesses with some particular purpose. Partnership, sole proprietary, a trust, corporate business and cooperatives are some examples of companies. Every organization needs to complete some responsibilities with a specific end goal to run the business effectively. A trust and a company are two various types of organizations that have particular qualities. They are framed for distinctive purposes, and have diverse attributes as far as their control, assets and set-up. Trust and company are the terms that are usually used for types organizations. A partnership firm is a type of company that has minimum 2 persons as partners who mutually agree to run the business collectively. There exist some contrasts between these terms related to their characteristics and functioning.

Company

A company can be defined as an organization having assets and people with the main goal of gaining profit which helps to expand the wealth of different shareholders. It can be said as a separate legal entity, and is enlisted as corporate under companies act. A business of company does not include partnership or other different incorporated groups.

Trust

A trust can be defined as an organization or a firm that is described by its trustees who complete duties related to fiduciaries, or go about as agents or administrators of financial assets related to other business or person. A trust has an obligation to administer the management of asset or grantor. A trust is generally shaped when grantor (the maker of the trust) believes that this association can do much better management of assets as compared to an individual.

Partnership

Partnership is a kind of company in which minimum 2 and maximum 100 people come together on an agreement to run the company collectively. The members mutually agree to run the business and share the profit and losses as per the agreement decided upon by them.

Company vs. Trust vs. Partnership

Definition

A company is actually a type of business association. It is an aggregation of assets and people with a main focus to gain profits. The members of a company invest money towards a common stock for carrying on the business together.

A trust is a corporation, especially a commercial bank, sorted out to complete the fiduciary of agencies and trusts.

A partnership is an organization where two or more persons enter into an agreement to carry on a business together. Each person is individually referred to as a ‘partner’ and collectively they are called as a ‘firm’. Partners hold shares of the firm and need consent of other partners to transfer the shares to anyone else. They agree to share the profits and losses mutually. A partnership organization is usually referred to as a ‘partnership firm’. Each partner is an agent of the partnership firm as well as an agent of all other partners. Partners are responsible for the acts of firm. There is no separate identity of the firm.

Meaning

A company is actually a legal entity and is a type of body corporate, for the most part enlisted under the Companies Act. A company does not incorporate any partnership or incorporated group of individuals.

A trust is described by the existence of trustee who directs financial assets in the interest of another. At the end of the day it can be explained in the way that all assets are held as a trust, which can choose related to matters identified with the beneficiaries and where the money has to be spent.

A partnership firm is created by mutual agreement between the partners. It is governed by Partnership Act. It is managed by the partners themselves. The number of partners can be minimum 2 and maximum 100.

Ownership

A company mostly owns tangible assets as well as intangible assets like copyrights, patents, land, buildings and so forth, with the ownership of stocks of different companies. It means company gets the share in both assets and profits of other companies on the basis of stock owned by that company.

A trust mostly owns tangible and intangible assets and the assets of grantors present in trust rather than the ownership of stock of different companies.

Goal

The main goal of company is to earn profit and do a business with the help of people associated with company.

The main goal of trust is to protect the assets and all property associated with the people in trust instead of gaining profit.

The main goal of a partnership firm is to gain profit and run business smoothly with the efforts of all partners.

Profits

The profit or proceeds earned by the company from the business are mostly spent on development projects of the company.

The profits or proceeds earned by the trust are mostly spent on charitable projects.

The profits and losses earned by the partnership firm are distributed in a pre-determined ratio among all partners. The profits are spent on the development projects of the firm.

Conclusion

From above article we come to know that a company is type of business association where aggregation of assets and people is there with the main focus to gain profits. Whereas, a trust is a corporation, especially a commercial bank, sorted out to complete the fiduciary of agencies and trusts. A company is actually a legal entity and is a type of body corporate; however a trust is described by the existence of trustee who directs financial assets in the interest of another. A company mostly owns tangible assets as well as intangible assets with the ownership of stocks of different companies; whereas a trust mostly owns tangible and intangible assets and the assets of grantors present in trust rather than the ownership of stock of different companies. The main goal of company is to gain profit and use it for development purposes. However, the focus of trust is not to get profit and its proceeds are used for charitable purposes. A partnership firm is a business organization that works with the efforts of 2 or more partners collectively. Its aim is to earn profits.Which is better in your opinion?