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WHAT IS PARTNERSHIP?
“Partnership is an association of two or more persons working together or any one of them acting for all”. They operate business in accordance to the partnership deed. Partners share the relationship of principal and agency among them, the acting partners works as an agent for their principle. Partnership registration is relatively easy and prevalent. Registration of partnership is not compulsory. However, to sue a partner by another partner or any other third party the firm should be registered but on the other hand third party can sue the firm. It is suggested to make a deed and register before starting a business in partnership.
The following should be contained in a deed:
Names of all partners
Addresses of all partners
The date of commencement of operation of the firm
Capital invested by each partner
The type of partnership
Profit sharing ratio
Rules regarding admission, retirement, death and dissolution of partner.
Easy to form
No legal compulsory formalities
Share decision making
Partnership registration is inexpensive
Minimal compliance -general Partnerships do not need to appoint auditors and do not need to file income taxes and, depending on turnover, service tax etc.
More people to share in the profits
Disagreements can occur
Partnership can be easily dissolved by giving notice