— Kishore V, SME and ACW at Edumarz
Basis of Difference | Firm’s Debts | Private Debts |
Meaning | The entire amount owed by the company to third parties. | The entire amount owing by the partner to third parties in his capacity. |
Liability | For the firm’s debt, all partners are jointly accountable according to their profit-sharing ratio. | The private debt will only be answerable to the relevant partners. |
Firm’s Property | The firm’s debts will be paid off by first realising the firm’s assets. | To the amount of the Partner’s personal share, but only after all of the Firm’s debts have been paid. |
Private Property | To the degree that the worth of property remains after all private debts have been paid. | Private debts will be settled first by realising the firm’s assets. |