BL PRESENTATION PARTNERSHIP MBA-10 61016.pptx

7/28/2019 BL PRESENTATION PARTNERSHIP MBA-10 61016.pptx

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PARTNERSHIP ACT 1930ADVANTAGES & DISADVANTAGES

OF PARTNERSHIP

Presented by:

Muhammad Imran Bhatti 61016 - MBA -

10

GLOBAL INSTITUTE LAHORE.


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DISCUSSION

What are the advantage and disadvantages

of partnership act, 1930?


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PARTNERSHIP ACT, 1930Short title extent and commencement-This Act may be called

the (The word "Indian" omitted by A. O., 1949.)* Partnership Act,

1932.

Definition of Partnership partner firm and firm

name----"Partnership" is the relation between persons who have

agreed to share the profits of a business carried on by all or any of

them acting for all.

Persons who have entered into partnership with one another arecalled individually "partners" and collectively "a firm", and the

name under which their business is carried on is called the "firm

name.


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ADVANTAGES OF PARTNERSHIPFollowing are the advantages of partnership:

Simplicity in Formation

Simplicity in Dissolution

Sufficient Capital

Skilled Workers

Sense of Responsibility

Satisfaction of Partners

Secrecy

Social BenefitExpansion of Business

Flexibility

Tax Facility

Public Factor

Prime Credit Standing

Minority Protection

Distribution of Work

Combined Abilities

Absence of Fraud


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ADVANTAGES OF PARTNERSHIP Simplicity in Formation

This type of business of organization can be formed easily

without any complex legal formalities. Two or more person

can start the business at any time. Its registration is also

very easy.

Simplicity in Dissolution

Partnership business can be dissolved at any time because

of no legal restrictions. Its dissolution is easy as compared

to Joint stock Company.

Partnership 2-20

Private Ltd. 2-50

Listed Company 7- Limited

Non-listed- 3 - Limited


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ADVANTAGES OF PARTNERSHIP Sufficient Capital

Partnership can collect more capital in the business

by the joint effort of the partners as compared to

sole proprietorship. Skilled Workers

As there is sufficient capital so a firm is in a better

position to hire the services of qualified and skilledworkers to some extent.


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ADVANTAGES OF PARTNERSHIP Sense of Responsibility

As there is unlimited liability in case of partnership,so every partner performs his duty honestly.

Satisfaction of Partners

In this type of business organization each partner issatisfied with the business because he can takepart in the management of the business.

Secrecy

In partnership it is not compulsory to publish theaccounts. So, the business secrecy remains withinpartners. This factor is very helpful for successfuloperation of the business.


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ADVANTAGES OF PARTNERSHIP Social Benefit

Two or more partners with their resources canbuild a strong business. This factor is veryhelpful in solving social problems like

unemployment. Expansion of Business

In this type of business organization, it is veryeasy to expand business volume by admitting

new partners and can borrow money easily. Flexibility

It is flexible business and partners can changetheir business policies with the mutual

consultation at any time.


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ADVANTAGES OF PARTNERSHIP Tax Facility

Every Partner pays tax individually, so, a firm is in a

better position as compared to Joint stock company.

Public Factor

Public shows more confidence in partnership as

compared to sole proprietorship. Ifa firm is registered

people feel no risk in creating relation with such

business. Prime Credit Standing

The liabilities of partners are unlimited, so the banks

and other financial institutions provide them credit

easily.


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ADVANTAGES OF PARTNERSHIP Combined Abilities

Every partner possesses different ability, which

helps in running the business effectively when

combined together. Absence of Fraud

In partnership each partner can look after the

business activities. He can check the accounts. So,

there is no risk of fraud.


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ADVANTAGES OF PARTNERSHIP Minority Protection

In partnership all policy matters are decided with

consent of each partner. This gives protection to

minority partners. Distribution of Work

There is distribution of work among the partners

according to their ability and experience. Thisincrease the efficiency of a firm.


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DISADVANTAGES OF PARTNERSHIPThe disadvantages of partnership are enumerated one by one as under:

Unlimited Liability

Limited Life of Firm

Limited Capital

Limited Abilities

Limited number of Partners

Legal Defects

Lack of Interest

Lack of Public Confidence

Lack of Prompt Decision

Lack of Secrecy

Chances of Dispute among

Partners

Expansion Problem

Frozen Investment

Risk of Loss

Transfer of Rights


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DISADVANTAGES OF PARTNERSHIP Unlimited Liability

It is the main disadvantage of partnership. It

means incase of loss, personal property of the

partners can be sold to pay off the firms debts.

Limited Life of Firm

The life of this type of business organization is

very limited. It may come to an end if anypartner dies or new partner enters into

business.


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DISADVANTAGES OF PARTNERSHIP Limited Capital

No doubt, in partnership, capital, is greater ascompared to sole proprietorship, but it is smallas compared to Joint Stock Company. So, abusiness cannot be expanded on a large scale.

Limited Abilities

As financial resources of partnership are limitedas compared to Joint Stock Company, so it isnot possible to engage the services of highertechnical and qualified persons. This causes thefailure of business, sooner or later.


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DISADVANTAGES OF PARTNERSHIP Limited number of Partners

In partnership, the number of partners is limited, sothe resources are also limited. That is why businesscannot expand on large scale.

Legal DefectsThere are no effective rules and regulations to controlthe partnership activities. So, it can not handle largescale production.

Lack of InterestMinor Partners do not take interest in the businessactivities due to limited share in profit and limitedchances of growth of business.


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DISADVANTAGES OF PARTNERSHIP Lack of Public Confidence

As there is no need by law to publish accounts inpartnership, so people lose confidence and avoiddealing and entering into contact with such firm.

Lack of Prompt Decision

In partnership all decision are made by mutualconsultation. Sometimes, delay in decisions becomesthe cause of loss.

Lack of Secrecy

In case of misunderstandings and dispute among thepartners, business secrets can be revealed.


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DISADVANTAGES OF PARTNERSHIP Chances of Dispute among Partners

In partnership there are much chances of

dispute among the partners because all the

partners are not equal mind.

Expansion Problem

Partnership business may not be expensive

due to limited number of partners, limited

capital and unlimited liability.


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DISADVANTAGES OF PARTNERSHIP Frozen Investment

It is easy to invest money in partnership but verydifficult to withdraw it.

Risk of LossThere is a risk of loss due to less qualified andless experienced people.

Transfer of Rights

In partnership no partner can transfer his sharewithout the consent of all other partners.


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THANKS

Documents

BL PRESENTATION PARTNERSHIP MBA-10 61016.pptx