Write short notes on the following. Merits of a partnership firm

ANSWER:

Merits of a partnership firm:

i. Easy formation: It requires an agreement (oral or written) between two or more partners for its formation. Thus, easy formation.

ii. Sharing of risks: The risks in a partnership firm are shared jointly by all partners. This reduces the burden on each partner.

iii. Balanced decision making: Decision making is balanced, as all decisions are taken collectively by all partners.

iv. Confidentiality: As a partnership firm is not required to publish its accounts or submit its reports legally, confidentiality and secrecy of information are maintained.

v. Greater flexibility: A partnership firm enjoys greater flexibility because not many restrictions are there under the Partnership Act.


vi. Greater availability of resources: As partners pool their capital and resources, the business gets higher amount of funds for its operations.