Today we will tell you about the partnership business. There are many of us who are fed up with daily jobs and want to do good business. So they want to do a good business but they don’t have the capital to do good business so they need to do a partnership business. There is a process in partnership business that we will tell you in detail in this post. And after reading this post you know everything about partnership business. So if you want to have a good and excellent partnership business then read our full post and read carefully.
A partnership such a business that is run by at least two to twenty persons and in the case of a banking maximum of ten persons is the limit is called a partnership. The partnership is good for business because there is more than 1 person who works in a single thought, and two persons are better than one. If you want to start a partnership business you will succeed in a short time. But This is also not good in some cases that is why we try to share the advantages and disadvantages of a partnership.
Advantages & Disadvantages of Partnership Business
Now we share the advantages and disadvantages of the partnership business. After reading this information you will know the all merits and demerits of partnership. If you want to start a business and with 1 or more partners, so you should read this article carefully.
Advantages Of Partnership Business
There are many advantages of partnership business and some of them are the following:
As you know the partnership business has at least 2 persons. it means that you have a double investment for this business. A large amount of capital is accumulated which not only fulfills the business needs but can be increased at any time by increasing the number of partners.
2. Formation of Partnership Business:
If you want to start a partnership business so you can easily form without any strict legal formalities. 2 or more persons may start a business at any time when they want. And the registration of the partnership business is also very easy.
3. Personal Interest:
The desire for profit and loss are two such factors which cause take personal interest of the two or more partners, with a great concentration on the affairs of the business. The partners know that it is only their devotion, dedication, and hard-working which could improve the business immensely, and on the other hand, their little recklessness and carelessness could cause a big loss for business which may result in the sinking of their investment.
All the decisions that are made in a partnership business are made by all the partners together, so one of the advantages is that you can make a good decision. And whether it’s a profit or loss situation, a good decision can save you from big damage.
5. Combined Skills:
It is a common belief that two heads are better than one and it is true especially in partnership. In partnership business partners have different skills, experience, abilities, and qualifications. These different and diversified qualities prove to be a windfall for the partnership business. If a person starts a business, he alone will have few skills, but if you start with more than one, you can have thousands of skills in starting a business that will help you build the best business.
As in partnership, there are many partners who take part in the management of the business So the duties and responsibilities are distributed among the partners for whom they are bere qualified and suited.
Profit depends upon the magnitude of capital. In a partnership business, the volume of capital is too high therefore a partnership firm is successful enough to provide the customers we a vast variety of goods and other facilities that cause high profit.
8. Stability of Business:
In case of any contingency condition ( for example accident or long illness of one partner etc. ), the business does not remain closed because of being more partners in a firm. In this condition, the remaining partners accept their responsibilities and start performing and sharing the work of the absent partner or partners.
The partnership is one of the oldest forms of business ownership and therefore, the law has clear cut answers about the legal acts, rights, duties, liabilities of partners. So, partnership problems can be clearly and definitely solved in the light of partnership law.
10. Tax Saving:
The tax is imposed individually after the profit of the firm has been divided among the partners. Therefore, a large amount of tax is saved.
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DISADVANTAGES OF A PARTNERSHIP
There are the following disadvantages of Partnership Business:
1.The difference of Opinions:
A very big demerit of the partnership is the difference of opinions among the partners. Every partner assumes himself to be the ablest, hardworking, genius, and capable person. In the start partners work in a friendly environment but as time passes the differences arise on different issues. Partners start criticizing each other. When the differences increase, the result comes in the termination of business.
2. Unlimited Liability:
in case of a huge loss to the business, the partners are liable to pay their debts by selling the assets of the business and if the worth is less then the debts, partners must resort to selling out their personal properties.
3. Uncertain Life:
The life of the business of a partnership firm is considered very uncertain. The most dangerous ctor is the difference of opinion among the partners. More than 70% of partnership businesses tum out to be the prey of this factor after all.
4. Delay in Decisions:
Until and unless the partners are not mutually agreed at any particular decision, the business can neither finalize it nor implement it without the consent of all the partners. Therefore, it causes an unnecessary delay in decisions and harms the stability of the business.
5.Sudden Reduction of Capital:
Because the capital of a partner is to be returned either him or his inheritors in case of the retirement or accident therefore, the abrupt reduction of capital in the business may harm it immeasurably.
6. Fixed Capital:
In partnership, the capital is fixed. Neither any partner can withdraw his capital nor can transfer it to his successor or inheritor.
I hope the information about the Partnership will very useful for you. If you find any mistake or you want any information please tell us in the comments section, we definitely answer you.