Tabulated below are the major differences of the financial statement between a Sole Proprietorship and a Limited Company
|
Sole Proprietorship |
Limited Company |
|
The owner’s equity has only one item which is the owner’s equity account |
Shareholders fund = Share Capital + Retained Earnings + Other Revenue & Capital Reserves |
|
Tax on the income of the owner/sole proprietor |
A limited company is imposed tax as it is a separate legal entity |
|
As it is not subjected to any accounting standards or generally acceptable accounting practices (GAAP), the owner can decides whether financial statements need to be prepared or not and if they decide to prepare it, the form of the financial statement is also the decision of the owner. |
Needs to follow proper accounting concept, principles, rules and other regulatory framework. |
|
Not subjected to audit |
Needs to be audited and therefore needs to follow the strict accounting concepts, principles, rules and other regulatory framework. |
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