Partnership Firm is a business organization in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement.
Partnership Firm is the traditional and simple structure for doing business. It is prevalent amongst small and medium sized businesses mainly in the unorganized sectors.
Partnership Firm is easy to form , run and close. The main disadvantage of partnership structure of business is the personal liability of partners for the liability of the partnership firm as such and among the partners ( ie each partner is responsible or liable for another partner’s misconduct or negligence in the conduct of the business of the partnership.)
Partnership firm is formed by entering into a partnership agreement.
The partnership agreement is prepared incorporating the following details:
1. The name of the firm.
2. The names and addresses of the partners.
3. The nature of the business.
4. The term or duration of partnership.
5. The amount of capital to be contributed by each partner.
6. The drawings that can be made by each partner.
7. The interest to be allowed on capital and charged on drawings.
8. Rights of partners.
9. Duties of partners.
10. Remuneration to partners.
11. The ratio in which the profits or losses are to be shared among the partners.
12. The basis for the calculation of goodwill at the time of admission, retirement, and death of a partner.
13. The keeping of proper books of accounts and the preparation of Balance Sheet.
14. Settlement of amount on the dissolution of the firm.
15. The procedures to be adopted in the case of disputes among the partners.
16. .Arbitration clause.
Note:
In the state of Kerala the partnership agreement is to printed on Non-judicial stamp paper worth Rs.5000/-
No. As per Indian Partnership Act, 1932 registration of partnership firm is optional and at the discretion of the partners. But it is always advisable to register the firm since a registered firms enjoy special rights which aren’t available to the unregistered firms.
An application form along with fees is to be submitted to Registrar of Firms of the State in which firm is situated. The application has to be signed by all partners or their agents.
Inspector General,
Department of Registration,
Vanchiyur P.O
Thiruvananthapuram.
Kerala – 695035
regig.ker@nic.in 0471-2472118, 2472110
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