What's The Disadvantage Of The Partnership?


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abdul rehman answered
The partners have unlimited liability with respect to the debts of the business. Every partner is individually and jointly liable for all the debts of the firm. In a partnership if a partner dies becomes bankrupt or insane the partnership terminates. The difference may develop among them resulting in dissolution of business. The maximum limit of members is twenty and the huge amount of capital cannot be raised easily. The partner cannot transfer his share in the firm to any other person without the consent of all the other partners. Partnership firm does not enjoy public confidence due to lack of publicity.

All the partners have the independent decision making authority in their areas of management. Every partner has equal authority in the management. So every one would try to impose his decision and this lead to misunderstanding and dispute. This happens because all partners know business secrets. A dishonest and incompetent partner may create problems for his co-partners. The partnership business may miss the business opportunities due to delay decision making as a result of differences among the partners. As the registration of firm is not compulsory so there are chances of fraud. The partners of unregistered firm generally commit a fraud against each other.

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