A partnership is an association of two or more persons who operate a business, for example, a travel agency or a hotel as co-owners under some agreement.
A Formal Arrangement by two or more parties to manage and operate a business and share its profits.
Advantages
- Set up costs are low as shared
- Easy Formation: Formation without legal formalities. Oral or written: Registration is also not mandatory
- Large Resources
- Flexibility: The partners can introduce any change they consider desirable to meet the changed circumstances.
- Sharing of Risk
- Maintenance of Secrecy: A partnership firm is not expected to get its accounts audited and published
- Easy to dissolve
Disadvantages
- Lack of Harmony: Difference of opinion very often results in disharmony
- Limited Resources: The limit that more than twenty cannot be a member of a partnership form of business organization, limits the amount of capital that can be raised.
- Lack of Public Faith: Not legally formed
- Profit Shared
- Efficiency is suffered if interpersonal relations.