SP vs UDF (Stored procedures vs Functions)

1) Stored procedures are designed to return its output to the application. Functions, on the other hand, are designed to send their output to a query or T-SQL statement.

Example: If you have an operation such as a query with a FROM clause that requires a rowset be drawn from a table or set of tables, then a function will be your appropriate choice. However, when you want to use that same rowset in your application the better choice would be a stored procedure.
2) A UDF returns table variables, while a SPROC can't return a table variable although it can create a table.
Another significant difference between them is that UDFs can't change the server environment or your operating system environment, while a SPROC can.
3) Operationally, when T-SQL encounters an error the function stops, while T-SQL will ignore an error in a SPROC and proceed to the next statement in your code (provided you've included error handling support).
4) You'll also find that although a SPROC can be used in an XML FOR clause, a UDF cannot be.

5) SP is precomplied where as function is not pre compiled

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