Meaning of Partnership Firm
According to Indian partnership act, 1932
“Partnership is the relation between person who have agreed to share the profits of a business carried on by all or any of them acting for all”
The partnership is a firm in which two or more persons are agreed to do business and share profit and loss.
Characteristics of Partnership Firm
- Two or More person: partnership Firm must involve 2 or more partner but less than 10 partners in the banking business and 20 in any other business
- Agreement: There must be an agreement in any way that may be oral or written. Written agreement as called partnership Deed.
- Business: There should be a business that the partner carries for profit. the business should be legal.
- Registration: In India registration, if the partnership firm is not compulsory. But the down-side of non registered partnership firm they will not get any benefit from the government.
- Profit-sharing: All the partners should agree to share profit. But not losses there is a provision in the partnership deed for special partner may not share loss.
- Acting of all Partner: All the partners should carry the business but there may be a special partner Who is not involved in the management. He is called the sleeping partner.
Features of Partnership Firm
- Agreement: The partnership a contract or agreement between the partners. The contract between the partners may be written or oral. In most of the partnership firm, it is in the written form
- Number of Partners: According to the Companies act 1956. In a partnership firm, the number of partners should not exceed 20 partners but in banking business its 10 partners. But in companies act 2013 maximum number of partners can exceed 100.
- Sharing of Profit: The main purpose of the partnership firm to earn profits and to share it. In the absence of the partnership deed, the partner will share profits and losses equally.
- Activity: There is must be a business activity that at least one of the members Doing.
- Trust Between Partners: Trust between partners is showing the strength and bond between them. If there is a lack of trust to any member than the business may not work properly.