In Proprietorship business owner’s capital and power of management is limited. So that, they give the birth to a partnership Firm. Followings are the reasons for the birth of the partnership.
- A person has enough money for the business but does not have the necessary skills for business.
- The person has the necessary skills but does not have enough money.
- Business risk sharing etc.
The need for more than one person, more capital, skills and management to develop and operate on a large scale of business. In such a situation, more than one person is gathered, coordinating all the above things and forming a business that is complementary to each other.
In this article, you will clear about the following questions.
- Did you know about Partnership?
- How to Start a Partnership?
- How many number of partners in partnership?
- How to share and distribute Profits?
- How much the Liability of Partners in Partnership Firm?
- Ownership and management of the firm
1.Did you know about Partnership Firm?
According to Section 4 of Indian Partnerships Act, 1932, “Participation is a relationship between individuals who have agreed to share profits of business executed by either one or all of them on behalf of all.”
Individuals who join the partnership are called “partners” individually and collectively as a partnership firm.
From the above definition, it can be said that two or more persons, who are eligible to enter into a contract, have a partnership that makes a legitimate business for a profit.
2.How to Start a Partnership Firm?
Partnership are come into existence by contract. The partnership agreement may be written or verbal. But the written agreement is more desirable and imperative. Because if any confusion or dispute arises between partners, then it can be resolved according to the provisions of the partnership agreement. Therefore, a written agreement is a partnership agreement.
Partnership agreement is the administrative structure of the partnership firm, in which the provisions for the administration of the firm are mentioned. And how to run the partnership is write in agreements.
3.How many number of partner in partnership?
There are minimum number of partners in partnership firm is two or more persons who are eligible to enter into a contract.
The government has set maximum number of partners in the partnership firm will be not more than 50 members.
4.How to Share and Distribute Profits?
Normally, Partnership is started for profit and distribution. The provision for sharing profits or losses among business partners is made in the contract. If there is no provision in the contract, the profit or loss is divided according to the Partnership Act.
As per the partnership law, Sharing profit or loss among partners is an equal share, when there is no provision in the contract.
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5.How much the Liability of Partners in Partnership?
Generally, the firm’s liability is paid by selling the personal assets of the partners, if the firm’s debt is not paid by the firm’s assets as per the partnership law. Each partner is responsible for jointly and individually for a partnership firm. Thus, the responsibility of each partner is unlimited.
6.Ownership and management of the Partnership firm?
Partners are business owners and they manage the same business. Partnership firm is managed by one or more partners on behalf of all partners or all.
Partnership firm’s business operates one or more partners on behalf of all partners or on behalf of all. Thus, each partner is a representative of each other’s partner.
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