What is partnership?

A partnership is defined as two or more persons in business with a view to making profits; the number is usually limited to a maximum of 20.

What is Partnership deed?

“A partnership deed can be defined as a document that is prepared to explain important points so that the chances of clash among partners are minimized to a great extent. ”

Whenever a partnership is formed, the partners are bound in two kinds of responsibilities. One is the individual responsibility of each partner and the other is the collective responsibility of all the concerned partners.

The acts of partners in normal course of business unite the firm. If the partners work with understanding and collaboration, the company is sure to function flawlessly.

If there is mistrust among them, conflicts are bound to surface every now and then. It is because business is so complex a job that various kinds of decisions are to be taken almost on a daily basis.

The past experience of partnership firms show that there are disputes among partners over countless things and this results in the shutting down of the business.

So, a partnership deed can be defined as a document that is prepared to explain important points so that the chances of clash are minimized to a great extent. Such a document consists of all the significant clauses like name of the business, contribution of capital, allocation of profit and the like.

Partnership is a document containing all the matters according to which mutual rights, responsibilities and duties of the partners in the carrying out and administration of the matters of the firm are determined. The deed is surely to be signed by all the partners.

Procedure for Registration of a Partnership Firm

• The law relating to a partnership firm is contained in the Indian Partnership Act, 1932.

• Under Section 58 of the Act, a firm may be registered at any time ( not merely at the time of its formation but subsequently also ) by filing an application with the Registrar of Firms of the area in which any place of business of the firm is situated or proposed to be situated.

Advantage/ benefit of Partnership deed registration

any partner of the firm can sue or bring a suit for enforcement of rights arising out of a contract against the firm itself or any other partner of that firm. This also applies to third party contracts i.e the partner may sue a client or any third party for enforcement of a contract.

Tax advantage of partnerships

Partnerships are often favoured over corporations for taxation purposes, as the partnership structure does not generally incur a tax on profits before it is distributed to the partners.

However, depending on the partnership structure and the jurisdiction in which it operates, owners of a partnership may be exposed to greater personal liability than they would as shareholders of a corporation

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