Demerit of Partnership firm
- No Business secrets: The partner can keep the secrets to himself but these secrets can be known to competitors or others when there is conflict among the partners
- Uncertain existence: Death of any partner can sometime cause death of entire firm. Dishonesty, conflict and lack of resource also can collapse the firm
- No Personal contact: A partner can’t be in a position of maintain intimate contacts with his customers and employees. He cannot be able enter to the requirements of each and every customer. Then there is no close personal touch which decreases the competitive strength of the business.
- Unlimited liability: Proprietor is liable for all the debts of the business. In case the assets are insufficient to meet the debts, the personal property of the proprietor can be attached.
- Delay in decisions: The partnership firm is completely not free to take all decisions and to implement them. The partners need to consult or seek others approval. Delay in decisions reduces the efficiency of business.
- Danger of conflict: Many persons are the owners of partnership firm. There can be misunderstanding and jealousy among them and these cause problems in operation of business and profit making
- Difficulty in transfer of shares: Partners cannot transfer their share without the consent of other partners. There may be conflict when done otherwise.
Limited resources: There is low investment, may be higher than in sole trading but not sufficient for large scale production resulting in limited areas of operation.
