A partnership can be formed by minimum 2 partners and maximum 20 partners.
FEATURES OF PARTNERSHIP
1)The term and condition of partnership are laid down in a document known as partnership deed.
2)A partnership can be formed only on the basis of business. Business may include any trade, industry or profession. Thus a Partnership can engage in any occupation, production and distribution of goods and services.
3)The liability of partners are unlimited. If some obligation arises then not only the Partnership assets but also the private property of the partners can be taken for the payment of the liabilities of the firm.
4)Every partner is entitled to participate in the business but it is not necessary for all the partners to participate in day to day activities of the business. Even if the business is runed by some partners on behalf of all the partners, the consent of all the partners is necessary for taking any decisions.
5)In Partnership firm no partner is allowed to transfer their shares to other person and if doing the consent of other partners is required.
6)The partnership firms continues till the pleasure of partners. Legally partnership comes to an end if any partner dies, retire or become insolvent but if the remaining partners agree to continue the business under the original firm's name, the firm will not be dissolved and will continue its business after settling the claim of the outgoing partner.
TYPES OF PARTNERSHIP
1) PARTNERSHIP AT WILL:- This partnership will come to an end whenever any partner gives notice of his intension to do so. Such partnership exists on the will of the partners.
2) PARTICULAR PARTNERSHIP:- This partnership is formed for undertaking a particular venture. It comes to an end automatically with the completion of the venture.
3) PARTNERSHIP FOR FIXED DURATION:- This partnership is fixed for 2 to 5 years or any other duration as decided by the partner.
TYPES OF PARTNERS
Active partners:- Are active in day to day activities of the business.
Sleeping or dormant partner:- Such partner only contribute the capital and does not take part in day to day activities.
Nominal partner:- They just lend their names to the business, they do not participate in day to day activities neither contribute any capital.
Partnership holding out:- if a person by his own or conduct to hold out to another that he is a partner, he be prevented from denying that he is not a partner, the person who thus become liable to third parties to pay the debts of the firm's is known as a partner by holding out.
PARTNERSHIP DEED
1) Normally Carries the name of the business, address of its principal place and short summary of the nature of business.
2) The deed give important financial details of the partnership such as amount of capital to be invested by each partner, the profit and loss sharing of each partner, the method of distributing the business income.
3) The deed provides a accepted method for accounting of the cash flow, profit and loss, and assets and liabilities of the business. There should be a ficsal year mentioned for accounting statements and how these statements will be distributed amongst the partners.
4) The duties, power and obligations of each partner shall be spelt out in the deed.
5) The deed shall be mentioned that if a partner is to be hindrance or detriment to the business or loses legal rights in a bankruptcy or other court action, the other partner must have a method of modifying the partnership rights of or expelling him.
6) The deed shall have mentioned the method of dissolving a business if desired and how the accounts will be settled within the partner at the termination of the business.
7) As the business partnership deed must provide the mean of arbitration of disputes. The main aim of the deed is to avoid expensive litigation over details that have not been fully worked out in signed agreement.
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