Demerits (disadvantages) of partnerships
- Partnerships have unlimited liability. That is, in case of debts arising out of the business operations, personal property of the partners in addition to partnership property can be sold in order to recover the debt.
- The mistake made by an individual affects all the members within the partnership. This is due to collective responsibility in the business operations.
- There are delays in business decision making and implementations. This is because all members have to be consulted before any action is undertaken.
- A partnership can be dissolved in case of death of one partner. This affects the continuity of the business.
- Partnerships suffer from dis economies of scale due to large-scale operations of the business. This is in form of mismanagement of funds.
- The membership of partnership is limited up to 20 members. This limits the capacity of the partnership to mobilize and raise more funds in order to expand the business.
CATEGORIES Economics
TAGS Dr. Bbosa Science
