Who contributes capital
In a Mudarabah, one side provides all the capital (the rabb-ul-mal) and the other provides management (the mudarib). In a Musharakah, all partners contribute capital — and typically may share in management.
If your deal is 'I have money, you have the skill,' that's a Mudarabah. If it's 'we're all putting money in together,' that's a Musharakah.
How loss is shared
This is the sharpest difference. In a Mudarabah, financial loss falls on the capital provider alone (absent manager misconduct). In a Musharakah, loss is shared strictly in proportion to each partner's capital contribution.
Profit, in both, is shared by a pre-agreed ratio rather than strictly by capital — but loss in a Musharakah always tracks capital.
Control and governance
A Mudarabah concentrates operational control in the manager; the investor is largely passive. A Musharakah tends to involve shared decision-making, which can mean more alignment but also more coordination.
Choose based on how involved the capital providers want to be — and how the parties want the downside allocated.