Question

Why is partnership regarded as a viable option for overcoming the disadvantages of financing and managing an expanding business under sole proprietorship?

Answer 1

The partnership serves as a better form of business organisation over sole proprietorship in certain aspects. It provides a solution for the limited financial resources and management skills required for expanding the business because :

(a) Number of members will be large, contributing larger amount of funds to undertake additional operations.

(b) Balanced decision making by the partners of varied managerial skills will not only reduce the burden of work but also leads to fewer errors in judgements.