What is partnership?
A Partnership Firm is one of the popular forms of business that are owned, managed and controlled by an Association of People for the purpose of profit. Partnership firm are relatively easier to register in comparison to other form of business.
Benefits
- Partnership firm is relatively easy to form because it is a contractual agreement between the partners to run an enterprise. Also legal formalities associated with formation are minimal.
- Taxation rates applicable to partnership are lower than sole proprietorship and company forms of business ownership.
- The partners can easily appreciate and quickly react to the changing conditions.
- All the liabilities are shared by the every partner equally.
FAQ
- What is a partnership firm?
It is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed that may or may not be registered. Also the members are personally shared the liabilities as well as profits of the firm in a predetermined ratio.
- What are the necessary elements that are required to form a partnership?
These elements are necessary to form a partnership:
- There must be a contract between two or more persons.
- The agreement must be to share the profits of the business.
- All partners together, or any one, on behalf of the others must carry on the business.
- What is the capital of a partnership firm?
Capital is the initial amount in cash or kind contributed by the partners to start the business. It is not necessary for each partner to contribute equally to the capital. Contribution is based on the agreement between the parties.
- What is the maximum number of partners in partnership firm?
Number of partners should not exceed the number 20.
- Who can be partners?
Partners must be major (more than 18 years) and should not be disqualified by law from entering into a contract.
- Whether a non-citizen of India can be a partner in an Indian firm?
The Partnership Act does not prohibit a non-citizen from joining an Indian partnership firm, subject to necessary clearances and permissions from satisfactory authorities in this regard.
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