Merits/Advantages of Partnership Firm-HSC/Class 12,CBSE/NCERT Class 11 Business Studies

Merits/Advantages of Partnership Firm-HSC/Class 12,CBSE/NCERT Class 11 Business Studies


What are the merits of partnership firm? More Manpower – In partnership firm, there
are more than one owners. Due to presence of more than one owner, partnership
firm has an advantage of having more manpower as compared to sole proprietorship firms. More Financial Resources – Since there are
more than one owner in partnership firm, the partnership firm has access to more financial
resources. Partnership firm can raise more capital as
there are more than one owners. Ease of formation – The formation of a partnership
firm is easy because registration is not compulsory. Again its not mandatory for partners to register
their partnership agreement or partnership deed. Easy dissolution – The dissolution or the
closure of partnership firm is not very difficult. There are not much legal formalities involved
in closing the business and hence it is possible to close down the business very smoothly. In case of partnership firm, there is a division
of risk. In case of sole proprietorship concern, there
is only one owner and hence there is no division of risk. However in case of partnership firm, there
are two or more than two owners and hence there is a division of risk. The risk is not borne by a single person. The risk of loss gets divided among all the
partners. Secrecy – There is more secrecy in partnership
firm as compared to some other bigger forms of business organisations like private limited
company or a public limited company. This is because the partners do not have to
publish partnership firm’s financial statements anywhere. In case of some other forms of business organisations
like public limited company, you need to publish your financial statements to the public on
regular basis. Better Decision Making – In case of partnership
firm, the decision is taken by the owners jointly. Since the decision is taken jointly, it results
in better decision making. Flexibility – In case of partnership firm,
there is more flexibility in operation of the business as compared to some other bigger
forms of business organisations like public limited company. In case of public limited company in certain
decision making you have to involve shareholders. So you need to call shareholders meeting before
taking the decision which is not the case in case of partnership firm. So there is a lot of flexibility in decision
making as well as operation of the business.

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