Partnership deed can be oral, but still a partnership deed is composed to stay away from future clash. Partnership registration in India is made legal on stamp paper. It contains all the rights and obligations of the people.
PAN card of the partners
Address proof of the partners
Address proof of the firm.
The Indian Partnership Act, 1932, defines partnership. According to Hanson, “a partnership is a business entity in which two or more individuals carry out some kind of business activity together up to a maximum of twenty people”. Now, we can define partnership as a community of two or more people who have agreed to share the profits of the business they are running together. Everyone can continue this business or any of them will act for everyone.
Advantages of partnership firm
Easy construction:
A partnership is a contractual agreement between partners to run a company. Therefore, it is very easy to form. Legal formalities related to construction are minimal. However, registration of the partnership firm is required, but not mandatory.
More capital is available:
We have just seen that sole proprietorship suffers from a limited funding limit. The partnership firm registration has largely overcome this problem, as there are now more than one person to fund the organization. It also increases the firm’s borrowing capacity. In addition, lending institutions also take a lower risk in granting credit to a partnership firm than a proprietary right because the risk of loss extends not only to one but to many partners.
Combined Talent, Judgment and Expertise:
Since there is more than one owner in the partnership, all the partners are involved in decision making. Typically, partners pool from different specific locations to complement each other. For example, if there are three partners, one partner is an expert in production, the other is finance and the third is marketing. This gives the organization the benefit of the collective expertise to make good decisions. Therefore, the old maxim of “two heads being better than one” applies aptly to the partnership.
Accident Prevalence:
You have seen that the total losses are borne only by the sole proprietor, but in the case of a partnership, the losses of the company are shared according to the profit-sharing ratios agreed upon by all the partners. Therefore, the share of loss in the case of each partner is less than in the case of ownership.
Flexibility:
Like the owner, the partnership firm business is also simple. Partners can easily appreciate changing situations and respond quickly. No large business organization can suppress such quick and creative responses to new opportunities.
Tax purpose:
The tax rates applicable to the partnership firm are lower than the company forms of owner and business ownership.
Characteristic of partnership firm registration
Profit Sharing: The main objective of the Partnership firm registration online in India is to make a profit and share these profits equally or by agreement. If the agreement is silent they will share the profits equally as given in the “Indian Partnership Act, 1932”. A non-profit organization cannot be called a partner.
Legal business existence: The business of the partner company must be for profit and it must be in accordance with land law. The partnership does not conduct charitable activities.
General (joint) management: All partners can be actively involved in management. This means that the partnership firm has general management. But in practice it is not possible & convenient. It is therefore managed by one or both partners on behalf of all other partners.
Agency Relationship: The partners of the partner company work with double capacity, i.e. as principal and agent. He can participate in management, he can examine the books of accounts, and he can share the gains and losses. Etc. Each partner has the right to deal with outsiders in the capacity of the principal & other partners, each partner being an agent.
Team Spirit: Team Spirit means collaboration & coordination with each other. There should be cooperation & coordination among all partners. Each partner is the trustee of the other partner. He must give a true account of all his affairs in the partnership.
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