Partnership is an association of two or more individuals who concur to share the profit of law business which is administer and carried on either by all or by any or some of them acting for all. Partnership has many advantages in which some of them are as under:
The partnership, like the sole traders, can be easily formed. Hence there are no legal procedures involved in the institution of partnership business. When partners sign the partnership agreement, get the firm registered and start business.
In partnership business, the capital is raised in large amount as compare to sole proprietor ship. So partnerships can carry more capital to the business by the joint efforts of the allies. The partnership is normally in strong position to borrow long term capital loans and expand the business.
Better Management Capability
As there are many partners concerned in the process of a business, the firm can deal out the duties and responsibilities to each partner for which one is best qualified and appropriate. Division of labor and specialization thus can endorse efficiency of the firm.
There is an old age saying that two heads are better than one. In case of partnerships the partner mutually consults each other about the lay out, production procedure, marketing channels, etc. and as a result, a wise course of procedure results.
Easy Exit or Entry of New Partner
If any partner wishes to leave the firm or new partner wants to joint it, so the partners with mutual consultation can introduce the new blood in the business and can permit the disinterested one to leave it.
In Partnership profit divided to the partner as per agreement. They encouraged to do more work to earn more profit. Higher will be the partners share than he can get higher profit from the business.
Retention of skilled worker
If an employee in the partnership is found to a man of outstanding talent and ability, he with the mutual consultations of the members, can be given a status of a partner in a business.
Brake on hasty decisions
As liability of partners unlimited, the partner is liable to be careful in taking business decisions. Hence they adopt sound practices in the conduct of business. There is a brake on hasty decision.
Special protection to minor
A death or lunacy of a partner may not cause dissolution of the partnership firm. His minor can admitted only to the benefits of partners with the consent of other partners.
The success of business depends upon mutual confidence and cooperation of the partners. So the partners are fully conscious that a minor difference can cause the end of partnership. This increases in them the spirit of working together.
In the case of registered firm, the profits allocated to partners. So they pay tax on their individual share of profits. The partners get the privileges of lower assessment.
Ease of Dissolution
In this business, partnerships can ended at any time with the consent of partner. So there are no legally procedures or requirement to dissolve the partnership. There no formal documents required to dissolve as compare to the Joint Stock Company.