Disadvantages of Partnership

Though partnership has many advantages, one should also see the other side of coin that is disadvantages of partnership. Let’s look at some of the disadvantages of partnership –

  1. One of the biggest disadvantages of partnership is that in partnership partners are jointly and individually liable for the actions of the other partners. So if one of the partners does some mistake, it s will put other partners also in trouble.
  2. In partnership for taking any decision one has to consult all other partners which delay the decision leading to loss, because in business time is the most important thing.
  3. In partnership since profit are shared among all the partners it may lead to disputes, if one partner is putting more time into the business and other partners are not putting that much time into the business.
  4. In case of unlimited liability partnership, partners could lose all of their personal assets in case of bankruptcy of partnership firm.
  5. A partnership firm comes to an end in the event of death, lunacy or bankruptcy of any partner which in case of established business can be unfair to other partners.
  6. The amount of capital which partnership firm can raise from outside sources is limited as compared to a listed company and therefore scope of partnership business is limited as no business can survive without fresh capital.

You might also be interested in checking out various advantages of partnership in one of my previous articles.

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