Main drawbacks or disadvantages of partnership firm can be highlighted as follows:
1. Uncertain Future
The future of partnership firm is always uncertain. It may be shut down in case of lunacy or death of a partner.So, there is instability in this form of business.
2. Unlimited Liability
All the partners are liable for the losses of business. They have to sell their personal property in order to pay debts and other liabilities of the business.
There is a chance of disagreement between partners in partnership business. Misunderstanding and mistrust may create dispute among the partners.
4. No Prompt Decision And Action
In partnership firm, there should be interaction, consultation and approval of all partners to make a decision. It delays decision making process. Prompt action is not possible because of delayed decision.
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5. Limited Capital
Partnership firms have more capital than sole proprietorship business but they have very limited amount of capital while comparing to joint stock companies and multinational companies.
6. No Public Faith
Partnership firm lacks legal status because no legal procedures are followed to start the business. It will be hard for the public to believe such business. So, it lacks public faith.
