Benefits of Partnership

Benefits of Partnership

Partnership is a contract between the people to operate a business. Each partner has equal rights and authority to carry out the business activities. The management decisions are taken by the partners and they are responsible for the contract. Partnership plays a vital role for small business and start up businesses. Initially, the enterprise would yield low turnover, so partnership is quite a good choice for new business. The partnership agreement is signed in front of the partners and the signed agreement has to be retained by both the partners.

Benefits of Partnership:

  1. The main advantage is that the partners can share their decision making, new ideas, skills, revenues and liabilities.

  2. Investment of capital by both the partners will result in more potential for growth and the profit can also be shared between the partners.

  3. It is easier to form, manage and carry out as it has lesser stringent regulations.

  4. Partners can share the responsibility in indulging business activities and can split the management tasks according to each partner’s skills and knowledge.

  5. The partners can make a collaborative decision making for the conflicts and for problem solving.

  6. Partnership can be cost effective as the partners put their financial resources together.

  7. Partnerships provide a moral support as both the minds work together in case of any critical situations.

  8. In partnerships, the partners are equally responsible for business debts and liabilities.

  9. The expertise of the co-partners would strengthen the business productivity.

  10. The work load can be shared by both the partners and save time for the other activities.

  11. Partnership enhances confidence, mutual trust and collaboration between the partners.

  12. As partnership is legally abides by law, there is no fear in case of disagreements or conflicts.

  13. The profits of partnership are taxed once instead of twice when compared to other single enterprises.

  14. The registration of the partnership is optional.

  1. The firm can be registered at any time by filling the application with Registrar of Firms.

  2. The procedure for registration of partnership is also easy and can be done quickly.

  3. Indian partnership act 1932 formulates a set of rules as how to make partnerships, procedure for registration and who to contact incase of conflicts.

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