![]() ![]() Let us consider a few definitions on partnership below Ī partnership firm is governed by the provisions of the Partnership Act, 1932. Partnership grows essentially because of the limitations or disadvantages of proprietorship. When these persons come together, pool their capital and skills, and organize a business, it is called a partnership. ![]() This calls for more persons come together with different ages and start a business.įor example, a person who lacks managerial skills but may have capital, and another person who is a good manager but may at his capital. A proprietor finds himself unable to fulfill these requirements. Sole proprietorship form of ownership suffers from certain limitations such as limited resources, limited skill, and unlimited liability.Įxpansion in business requires more capital and managerial skills and also involves more risk. Definition of Partnership Form of Business Organization It is always better to insist on a written agreement among partners to avoid future controversies. This agreement is termed as ‘Partnership Deed,’ which lays down certain terms and conditions for starting and running the partnership firm. Thus, there must be some agreement between the partners before they start the business. How will the profits and losses be shared?.The amount of capital to be contributed by each one of you.When you invite your friends to start such a business, it should be the duty of all of you to decide Yes, these are the few questions that might be coming to your mind. If there is any loss, then who will suffer the loss?.Do all the partners jointly manage the business, or can any of them manage the business on behalf of others?.You must be thinking about how much capital each partner contributes?.The partners provide the necessary capital, run the business jointly, and share the responsibility. The persons who join hands are individually known as ‘Partner’ and collectively a ‘Firm.’ A partnership is a relation between two or more persons who join hands to form a business organization to earn a profit. ![]()
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