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Advantages of Partnership

(i)    Ease of Formation. Formation of partnership is a simple process. There no legal formalities involved in its formation as in case of a company. An agreement which may be oral or written, is sufficient to enter into partnership. Registration of the firm is not compulsory. But if a firm wants to get itself registered, the procedure is very simple.

(ii)    Flexbility. The firm can undertake any kind of business agreed upon by all the partners. Moreover, there are not much restrictions under the Partnership Act on the manner and mode of management of the firm’s operations. Capital, profit sharing ratio, pricing policy and other terms and conditions of the partnership can be changed easily.

(iii)    Matching of Ownership and Control. The partners who are the proprietors of the firm can also participate in the management of the business. Moreover, there is a relationship between he efforts and rewards as in case of a sole trader. This acts as a motivating factor for the partners to work hard for the success of the business.

(iv)    Impact of Unlimited Liability. The partners are severally and jointly liable for the debts of the firm upto an unlimited extent. This compels them to conduct business carefully by acting as a breaker on hasty and reckless decision. Each partner tends to be cautious and adopts sound business practices in the interest of the partnership business.

(v)    Secrecy. Important secrets of a partnership firm can be maintained as it is not compulsory for it to get its accounts audited and published.

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