Question

Define partnership discuss its merits and limitations

Answer 1

Answer:

Partnership is considered to be a relatively unpopular form of business ownership because of the various limitations associated with it. These limitations include unlimited liability, limited resources, possibility of conflicts and lack of continuity.

Answer 2

MERITS OF PARTNERSHIP

• Easy to form :- It is very easy to form a partnership firm as no legal formalities are required to be completed. Even registration of partnership firm is not compulsory according to Partnership Act.
• Larger Financial Resources :- In partnership firm all the partners contributes some amount of capital. As a result the financial resources of partner ship firm are larger than the sole proprietorship firm or joint Hindu family business.

DEMERITS OF PARTNERSHIP

• Unlimited liability :- The liability of all the partners is unlimited. In case of losses, the partners will not only lose their business property but creditors can claim over their personal property also to get their accounts settled.
• Conflicts :- The partners in partnership firm come from different backgrounds, different families, therefore, they may have differences of opinion. It partners adopt a Rigid attitude then it may lead to conflict among the partners.