Partnership is a voluntary association of two or more persons who agree to carry on some business jointly and share its profits and losses.
It is very good decision to being into a partnership firm cause it has many advantages like easy formation and closure,risk sharing, secrecy, balanced decision and large financial resources.
But everything has two aspects advantage as well as some demerits. So here are some limitations of a partnership firm:
1. Limited resources – There is a restriction on the number of partners and hence capital contributed by them is also limited.
2. Unlimited liability- The liability of partners is unlimited and they are liable individually as well as jointly. It may prove to be a big drawback for those partners who have greater personal wealth.
3. lack of continuity – Partnership comes to an end with the death, retirement, insolvency or lunacy of any of its partner.
4. lack of public confidence– Partnership firms are not required to publish their reports and accounts. Thus they lack public confidence.