What is Partnership Firm?
A partnership firm is not a discreet legal agency independent of its staff. It’s simply a simple name given to the people who write it. Thus, unlike a firm that has a separate legal entity independent of its shareholders, a company does not own property or employ servants, nor will it be a debtor or a loan. No one has to sue or sue.
It is just for the sake of convenience that terms such as “company property” “company employee” “suit against the company” and so on are used for legal reasons, but in the light of the statute, it simply means “partner property” “partner employees” and “suit against the partners of that company.”
advantages of a partnership firm :
Easy to Start
One of the easiest starting businesses. In most cases, a partnership agreement is the only prerequisite to start a partnership business. A collaboration may then be initiated on the same day. Instead, it will take approximately five to ten business days for LLP registration, as digital signatures, DIN, Name Approval, and Incorporation must be collected from MCA.
Decision Making
Every organization's decision-making is critical. Decisions could be quicker in a partner organization as the implementation of resolutions may not have a definition. Partners in a partnership company have a wide range of powers and in most cases may transact without the approval of other partners on behalf of a partnership company.
Raising of Funds
A partnership corporation can quickly obtain funds compared to a proprietorship company. Several partners contribute to the partners more workable. Moreover, when sanctioning credit institutions rather than a proprietary company, banks often view a relationship as more favorable.
Sense of Ownership
The operations of their business are owned and managed by each partner. Their roles can be different, but people are united for a common purpose in a partnership firm. A stronger sense of responsibility is created by ownership and paves the way for a conscientious staff.
dis-Advantages Of A Partnership Firm :
Unlimited Liability
Each partner shall be personally responsible for the losses of a business. Each partner is directly responsible for the liability formed by a partner in the partnership company. The LLP framework was established by the Government to restrict the liability of partners in a partnership company.
Number of Members
A collaboration corporation may have a maximum number of members of 20. For an LLP, the maximum number of partners is not limited.
Lack of a Central Figure
Management can uplift and derail a business. Combined ownership eliminates the leadership potential and leads to directionless behaviors due to a lack of leadership. In a Partnership business, on the other hand, such partners can have more powers and obligations in the role of designated partners.
Trust of the General Public
A partner company can be quickly set up and must be licensed. Also, without a lot of structure or rules, a business can work. Therefore, it also contributes to public mistrust.
Abrupt Dissolution
A relationship will be broken due to the death or insolvency of a partner. Such an abrupt breakup would hinder a company. On the other hand, the death of a spouse does not immediately break the LLP. The continuity of business is therefore preserved in the LLP
