ADVANTAGES OF PARTNERSHIP
- A partnership is easier to form: A partnership is often easier to form, and easier to manage. This is because partnerships are not as strictly regulated as Limited Liability and Companies by the laws that guide the formation of business. This is because only the partners have a say in the way the business is managed; so far as the partners agree. Partnerships also do not have to bear any interference like companies.
- Provides means of raising Capital for the business
Because of how partnerships are formed, it is easier to raise a start-up capital for the business. This means that the larger the number of partners coming together to form the business, the more funds they will be able to raise. A bigger amount of capital helps the business to start on a better footing. Comparing partnership to the sole proprietor who must provide the capital all alone one can say a partnership makes it easier to raise business capital.
- Partnerships benefit from Shared Responsibility
Partners in the business can share the responsibility of the running of the business. This enables them to be more efficient. By splitting work in the business according to each person’s task, a partnership draws on the special talents of each and every partner in the business. For example, a partner who is good with numbers can be made to take up the financial management function or the book keeping. Others who are good salesmen could be made to take up the marketing role and so on. This way the business benefits from the expertise of its partners.
- There is a greater tendency for good Decision Making
As partners share the decision making they are likely to reach a better decision than a sole proprietor for example. Usually, more partners mean that there are more brains to rely on in generating new business ideas and solving problems that may arise concerning the business.
- Incentive for prospective employees
Prospective employees may be attracted to the business if given the incentive to become a partner. In order words a highly skilled worker may be attracted to work for a company for the simple reason that he is offered the opportunity to become a partner and share in the profits made from the business.