Question

State any two characteristics of partnership which overcome the inherent limitations of sole proprietorship form of business organisation.

Answer 1

1. Managerial skills: It might not be possible for one individual to do every function competently. There are several partners in a partnership that are capable of handling various tasks. Therefore, rather than neglecting certain areas, it could be beneficial to develop partnerships in certain of them. In comparison to a single proprietorship, a partnership company has superior management talent.
2. Diversified risk: A single individual bears all of the risks in a solitary proprietorship. There are several individuals (partners) in a partnership who share the risk. In proportion to their profit shares, the partners share the risk. Entrepreneurs may come together to form a partnership company out of a fear of taking a chance.