Discuss the demerits of a Partnership Business.
Or, Discuss the disadvantages of a Partnership Business.
The disadvantages of a partnership business are discussed below:
1. Limited capital:
The financial viability of such businesses is much more limited than those of joint ventures. As a result, partnership businesses cannot raise much capital and cannot be large in size. it cannot even raise capital by selling shares or debentures in the market.
2. Uncertain sustainability:
Members can terminate the partnership at any time. As a result, sustainability is a big issue in this type of business.
3. Unlimited liability:
Partners cannot take too much risk because of unlimited liability. Moreover, since there are multiple partners, no one wants to shoulder too much risk.
4. Lack of privacy:
More than one partner participates in the management of partnership business. As a result, it is not possible to protect the confidentiality of the business.
5. Fault in management:
As every partner has equal rights in the management of the business, the business suffers a lot. because different opinions do not allow the business to be guided in the right direction.
6. Inability to make quick decisions:
Dealing with the opinions of all partners leads to delay in making any important decisions.
7. Moral pollution and conflict:
Differences may arise over minor matters of partnership business. It sometimes turns into moral pollution and disagreements.
8. Liability for acts of dishonest partner:
A partner in a partnership business is liable for the other partners’ wrongdoings.
9. Restrictions on transfer of shares:
No partner can transfer his share and truth without the consent of all partners.
10. Lack of public confidence:
The absence of statutory obligations, i.e. no restrictions on accounting and auditing, does not inspire special public confidence. It causes loss in business.
Important Questions from this Chapter:
- Characteristics of Sole Proprietorship Business
- Characteristics of Company
- Distinguish between Partnership Business and Sole Proprietorship Business
- Features of Private limited Company
- Distinguish between Private limited Company and Public limited Company
- Disadvantages of Partnership Business
- Advantages of registration of Partnership Business
- Disadvantages of Private limited Company
- Merits of Cooperative Societies
- Steps in forming a Business
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