Partnership | Explanation | Advantage

The partnership is a form of business organization. It is born based on the limitation of the sole trader. Some new systems adjusted with the old system by which partnership organization is born. When the sole trader starts trading at the beginning as a single individual. After some time, He is taken some loans. So then he appoints management, employees, etc. So then sole trade business expanding beyond the limit. Because insole trade management and finance both appear to be insufficient. In this situation, the sole trader joins hands with his employee and some outsiders are accepted as a partner. After that, The ownership of the business does not remain confined to one individual because it has been divided among various partners. In this condition, we can say that the partnership has started among the partners.

Advantage of Partnership

• Partnership formation is very easy. there is no need to observe legal formalities for the establishment of the partnership. there is not much expense involved in its establishment.

• A partnership organization is a group of people with different qualities. In this organization, any partner makes the decision based on all partner consultations.

• The sole trade all risk at the one individual. But in partnership, risk is not confined to one individual. There is a risk divide among all partners in the business.

• In the partnership one or more then partners invest capital and all liabilities get divided among the partners. Hence, we can say that partnerships have more financial resources.