Advantages or merits of partnership firm partnership firm can be highlighted as follows:
1. Easy To Commence
Partnership firm can be established and operated easily. It does not require legal process and formalities to start partnership business. Registration is not compulsory.
2. Low Set-up Cost
It can be commenced with low set-up costs. It does not require large capital to operate partnership firm. Partners may increase capital to expand their business as per the requirement.
3. High Borrowing Capacity
In partnership firm, large amount of capital can be raised because there are more partners to provide fund. Banks and other financial institution also provide loans easily to the partnership firms as compared to sole trading concern.
4. Better Management
Better management is possible because of the sense of ownership, combined talent and coordination among the partners.
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5. Division Of Risk
In partnership firm, all the business losses are borne by all partners as per the partnership deed. Debts and other liabilities are not borne by a single partner like in sole proprietorship.
6. Privacy
It is not compulsory to publish financial statements of partnership firm. So, it helps to maintain privacy and secrecy of the business.
The size and working pattern of the business can be modified or changed as per the need and the environment. So, it is a flexible form of business organization.
8. Equal Rights
It ensures equal rights to all the partners. They have equal right to express their feelings, opinions and to take part in decision making process of the firm.
9. Easy To Wind Up
It can be dissolved or wind up easily at any time by making agreement between the partners. It does not require legal formalities to shut down the business.
