PARTNERSHIP BUSINESS

Professor & Lawyer

Puttu Guru Prasad
Senior Faculty for Management Studies - VVIT
WHAT IS
PARTNERSHIP
BUSINESS?
A partnership is an arrangement in which
parties agree to co-operate to advance
their mutual interests.

According to Sec 4 of the Partnership Act

1932, Partnership is the relation between
persons who have agreed to share profits of a
business carried on by all or any of them acting
for all
1. General partnership: All the partner share
the management and profit equally.
Each partner has limited liability

2. Limited partnership: It has two types of

partner
(a)One or more general partners- who have
unlimited liability
(b) One or more limited partners- Whose
liability is limited to the amount of their
investment amount.
 CHARACTERISTICES OF PARTNRSHIP
BUSINESS
General partnership business :
. Minimum number two
. Maximum 20
. All partners are legally equal

Limited partnership business:

. It contains one or more general partners .
. At least one limited partner who contributes a certain amount of
capital.
. This types business must be registered.
SOME GENERAL CHARACTERISTICS
ease of starting,
control,
sole participation in profits and losses,
use of owners ability,
tax breaks,
secrecy and
ease of dissolving
Unlimited Liability.
Difficulty in raising capital.
Limitations in managerial ability.
Lack of stability.
Demands on time.
Difficulty in hiring and keeping high-achievement employees.
 PARTNERSHIP DEED

Articles of partnership is a voluntary

contract between two or among more than
two persons.
A partnership agreement is the written and legal
agreement between business partners.

Below are some of the written partnership

agreement

. What is the name of the partnership?

. What is the purpose of the partnership?
. What is the duration of the partnership?
. Location of the business.
 Responsibilities
What is each partner's role?

. What banking arrangements will be made for

the partnership?
. Which partners will have check signing
privileges?
. How will the books be kept?
. Method for dissolving the partnership
. When can the partnership be dissolved?
 ADVACNTAGES AND DISADVANTAGES OF A
PARTNERSHIP BUSINESS

ADVANTAGEA DISADVANTAGES
. More capital . Unlimited liabilities
. Combined managerial skills . Problem of management
. Easy to start . Lack of secrecy
. Tax advantages . Instability
 REGESTRATION OF PARTNERSHIP BUSINESS

. Name of the partnership business

. Address of the head office
. If there any branch of the business address of such branch.
. Purpose of the business
. Starting time of the business
. Partner name of the business and occupation
. Joining date of each partner in partnership
. Duration of business
 KINDS OF PARTNERS
1. Active or actual partners: Partners who take an active
part in the conduct of the partnership business are
called the actual partners.

2. Sleeping or dormant partners: There are persons who

merely put in their capital and do not take active part in the
conduct of partnership business.

3. Silent partners:Those who b agreement with other

partners has no voice in the partnership business is called
silent partners.
 KINDS OF PARTNERS

4. Partners in profits only: Partner who have stipulated

with other partners that he will be entitled to a certain share
of profits , without being liable for the losses, is known as a
partner in profits only.

5. Sub partner: when a partner agrees to share of

profits in a partnership firm with outsider is called a sub
partner.
 WHO CAN BE A PERTNER?
Any person become the partner except the
following persons

1. A minor
2. A man of unsound mind
3. Insolvent etc.
 Learning
1. The main issue in the partnership business is the
agreement. It can be written or orally
2. Family business whether it is sole proprietorship
or partnership personal clash and instability is the
main obstacle in the path of success
3. Different talents and skills join in the partnership
business
4. Considering partners philosophies makes the
success of partnership business
 Conclusion
After the sole proprietorship, partnership is the oldest and
most popular form of business. A partnership is mainly based
on a written contract or a voluntary and legal oral agreement.
Success in a voluntary and legal oral agreement. Success in a
partnership business mostly depend on considering each
partners philosophies because people with different talents
and skills may join in a partnership business.