What are the Advantages of Partnership?

A partnership can be defined as a type of business where the owner of the business is more than one person or an individual who is liable for the operation of the company. All the partner owners invest their funds in starting a firm, take part in day-to-day operation, and share the profits earned equally amongst each other. 

In a partnership firm, few partners only invest but do not take any part in the everyday operation of the business they are known as limited partners. These partners are solely liable for the money they have invested. Once it’s paid, they don’t have any additional liability related to the activities of the partnership business.

Apart from limited partners, some general partners are the acting administrator of the company. This partner has similar liabilities as a sole proprietor

So, a partnership is a business where the owner of a company is more than one individual. These individuals decide to start a business based on the terms and conditions registered on an agreement. These document that mentions all agreement terms is known as ‘Partnership Deed’. In this document outlines all details related to the position, responsibilities of each partner, their rights are mentioned.

A partnership deed is a legal contract between the partners of the firm. However, it is not compulsory to do partnership deed to run the partnership firm.

Advantages of Partnership

There are various benefits of establishing a partnership firm, but the top advantages of a partnership are mentioned below.

• Share of capital – Unlike a sole proprietor, partnership firm have many partners, which means a more abundant source of funds.
• Specialization – More than one partner means more expertise and skill set to run a business, which can boost the overall performance of a firm. 
• Minimal tax filings – It means there is no complication while filing for tax.
• No double taxation – Unlike a corporation, there is no double taxation. In fact, profits come straight to the owners.

The details mentioned above are required to have a basic knowledge of the Partnership advantages. For more information on commerce subjects stay tuned to BYJU’S.