A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations thereof.
Registration
Ordinarily a partnership is formed by an agreement, which may be either written or oral. This written agreement duly signed by all the partners, Stamped and registered is known as “Partnership Deed”.
Ordinarily, the rights, duties and liabilities of partners and other matter regarding the functioning of the Firm are mentioned in the deed. But in case if the deed is silent about any specific point, the provisions of THE INDIAN PARTNERSHIP ACT, 1932 will apply.
Some of the important clauses to be included in a partnership deed are as follows:
(1) Name of the firm and Its Address
(2) Name and Address of Partners
(3) Nature of Firm’s Business
(4) Duration of Partnership :
(5) Partners’ Capitals :
(6) Interest on Capital & Drawing
(8) Division of Profit
(9) Partners’ Salary and Commission
(10) Rights and Duties of Partners
(11) Admission and Retirement of Partners of partner, it should be stated in it.
(12) Death of a Partner
(13) Valuation of Goodwill
(14) Revaluation of Assets and Liabilities
(15) Accounts and Audit
(16) Dissolution of Partnership
(17) Arbitration Clause
Advantages:-
- Easy Formation
- Larger Resources
- Flexibility in operation
- Better Management
- Sharing of Risk
Disadvantages:-
- Instability
- Unlimited Liability
- Lack of Harmony
- Limited Capital