Merits : 

(a) Ease of formation and closure: A partnership firm can be formed easily with an agreement between two or more persons to carry some lawful business. There is no compulsion of registration. 

(b) Balanced decision making: Different partners having expertise in different areas of functions can take balanced decisions with the consent of all other partners. There is lesser burden of work. 

(c) More funds: Since the capital is contributed by many partners, it is possible to accumulate more funds for business. 

(d) Sharing of risks: since the risks involved in the business is shared by all the partners, the stress and burden of running the business gets reduced on individual partners. 

(e) Secrecy: it is generally not required to publish its accounts, hence, it can maintain confidentiality of its business operations.

Limitations of partnership 

(a) Unlimited liability: The liability of the partners is joint and several. They are liable to pay the liabilities of the firm in case the business funds are not sufficient to repay its debts. 

(b) Limited Resources: capital investment by partners is low as there is a restriction on the number of partners. The firm cannot expand beyond a certain size. 

(c) Possibility of conflicts: Since the decision making is shared by partners, any difference of opinion may result in disputes, Moreover, the decision of the partnership is binding on all partners. 

(d) Lack of continuity: A partnership may come to an end on the death, retirement, insolvency or lunacy of any one partner. However, the remaining partners may enter into fresh agreement to continue the business. 

(e) Lack of public confidence: Since a partnership is not required by law to publish its accounts, any member of the public finds it difficult to ascertain the true financial status of the firm.

Registration of a partnership firm is not obligatory. It is optional. However, an unregistered firm suffers from serious disabilities. 

Consequences of Non-registration of a firm 

(a) A partner of an unregistered firm cannot file suit against the firm or any other partner 

(b) An unregistered firm cannot file a suit against any third party for the recovery of claims. 

(c) An unregistered firm cannot file suit against any partner. Thus, the Indian Partnership Act, 1932 has effectively ensured the registration of firms without making it compulsory. The third parties, however, can file a suit against the unregistered firm for their claims.