Partnership firm Registration
A partnership firm a created by two or more persons when they agreed to share their profit to the loss of the entity. The person who entered into a partnership firm are called “partners” of the entity and altogether it called a partnership firm. Partnership firms are widely used by young entrepreneurs though they can share their investment and ideas with the entity though A Big investment and Good decision always help an entity to grow faster.
A partnership firm is easy to register and with fewer compliances and documentation processes. A partnership firm is suitable for medium size undertakings business, where the personal efforts and ideas of partners are very essentials. A partnership firm also involves the right to own, manage and control business among partners.
Advantages and Disadvantages of Partnership Firm
Formation of partnership is easy because all that need in partnership business is mentioned in Partnership agreement between partners and the partnership Agreement is prepared in writing although after oral conversation between partners of entity.
Partners can divide their works depending on their skill and knowledge and capacity. This will help partnership entity to grow faster.
Partners can pool resources and can make the strong financial base of the firm. Though which creditors will more willingly to provide credit facility to firm on reputation of partners and soundness of firm carried out by partners.
The structure of partnership firm is very flexible, with complete freedom to agree how the business to be managed and financed. The nature and place of business and be altered at will. In partnership firm, existing partner can exit and new partner can be joined whenever required.
Partners can bring their expertise, knowledge which will help other to take good decision in firm, though all partners are similarly responsible for taking wrong decision and losses. All Partners are compelled to take careful decision and caution path for firm, Partners are forced to take all the necessary steps which is beneficial for partnership firm.
Unlimited liability refers full responsibility of owners and partners for debt of entity and this liability cannot be capped. Every partners of the firm are jointly liable for debt of the firm.
Partnership is good and so far it can be started with small capital investment by its partners. But when it comes to expansion it become handicapped though limitation on numbers of partners and limited amount investment in partnership fir. After Beyond the point the Expansion of it business get stopped.
Partnership is built on trust and mutual consent amount partners. The dishonesty of one partner can ruin entire business and can put firm into serious problem. This is not mandatory the partners started the partnership business on mutual consent will have similar opinion on all various decision. Though the partners will have to choose the best decision amount it which can help firm to grow in future.
The firm will have to close down the shutter on death of one partner, insolvency, lunacy of any one among the partners, new partners can only be inducted in firm only when all partners agree to do so.
The transferability of interest of one partner to other outsider partner is not possible unless existing partners unanimously agree to do so. Though an investment in a partnership business, therefore, becomes an illiquid asset to firm.