Q. 8. What are the merits (advantages) of Partnership?

Ans: Following the merits or advantages of Partnership:
1) Easy formation: Formation of partnership firm is very easy It is free from complicated legal formalities Registration of partnership firm is not strictly compulsory. It requires only agreement which can be oral or written.
2) Higher capital: Capital enjoyed by partnership firm is higher because it is provided by two or more persons Again, to increase capital more partners can be admitted to partnership firm. Due to higher capital, expansion and development of business become very easy.
3) Flexibility: Partnership firm enjoys flexibility. Partners can expand the business, change the line of business or even close down the business without much legal formalities.
4) Business secrecy: Success of business depends upon secrecy. Partnership can maintain business secrecy. All business activities are managed by partners. All business secrets are known to partners. It is not necessary for partnership firm to publish books of accounts and business records. The competitors cannot get business secrets easily.
5) Division of labour and specialization: In partnership different persons having different skills come together. So proper distribution of work according to skill and interest of partners is possible. This results into specialization.
6) Sound decisions: In partnership, decisions are taken by all partners collectively after sufficient discussion. When decisions are taken collectively after sufficient discussion then they are sound, balanced and matured. Sound decision will bring more profit to business.
7) Spreading of risks: In partnership, business risks are spread among all the partners. Each partner bears a part of loss and not total loss. This encourages the partners to undertake big business deals.
8) Benefit of unlimited liability: In partnership, the liability of partners is unlimited. It is good that their liability is unlimited. Due to unlimited liability partners manage their business very carefully. They think twice before taking any important decision. Careful management brings profit to the business.
9) Limited government control: Government control on partnership is limited. The formation and working of partnership are free from government control. Registration of partnership is also not compulsory.
10) Easy dissolution: Like formation dissolution of partnership is also very easy. It is free from complicated legal formalities. Any partner can dissolve partnership by giving 14 days’ notice to other partners. Generally, the rules regarding dissolution of partnership are given in the Partners Deed.

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