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INDEX
1. Introduction 6. Types of
2. Definitions partnership firms
3. Features 7. Types of Partners
4. Merits 8. Formation
5. Demerits

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Introduction

Partnership is a form of business

organization. This form of business
starts to overcome the problems of
sole-proprietorship.

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Definitions : Partnership

Partnership is the relation between

two or more persons who have
agreed to share the profits of the
business carried on by all or any of
them acting for all.

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Definitions : Partners & firm

Persons who have agreed into

partnership with one another are
called individually ‘PARTNERS’
and collectively ‘FIRM’.

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Features : 1.Membership

There must be minimum 2 and

maximum 20 members to form the
partnership firm.

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Features : 2.Agreement

There must be an agreement

between the partners to form a
partnership either oral or written
also known as Partnership Deed .

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Sample of Partnership Deed:-

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Feature : 3.Business

A partnership may undertake any

lawful business activity.
The partnership can be formed
only for the purpose of carrying on
business which is legal.
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Feature : 4.Mutual agency

The acts of one partner are binding

on other partners.
Thus, partnership business can be
carried on by all or by any of them
acting for all.
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Features : 5.Profit sharing

The partners of the firm share the

profits of the firm in the ratio
specified in the agreement.

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Illustration :-

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Merits of Partnership
Easy to
Form

Larger Risk Division

Financial
Recourses sharing of work

Motivation

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Demerits of Partnership

Unlimited
Liability
Non-
transferab Uncertainty
Conflicts
ility of
shares
Risk of
mutual
agency

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Types of Partnership
Partnership

Fixed
At will period
particular

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Types of Partners
Partners

Active Dormant Secret Nominal Minor

By By holding
estoppel out

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Active Partners

The active partner participates in

the management of the firm.
I do all the
hard-work !

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Dormant Partners

The partners who does not

participates in the management of
the firm.
zzZZzzzzzZ
ZZzz …

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Secret Partners

The connection and relation of the

secret partner is not known to
outsiders.
Ssshh it’s a
secret..

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Minor Partner

The partnership Act 1932 does not

permit a minor to become a partner
in the partnership firm. The minor
can only be admitted to the
benefits of the firm.

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Nominal Partners

Nominal partners are not the real

partners of the firm. They only lend
their name and reputation for the
benefit of the firm.

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Registration : Procedure

 A partnership firm can be registered any

time.
 Partners have to apply to the registrar in a
prescribed form along with registration fees
& the information if authenticated, a
certificate of registration will be issued. It is
an evidence of existence of the firm.
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Registration : Procedure
 Sample of an application form.

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My Views on Partnership

 I think entering into a Partnership business

is much better option than running a sole
proprietorship business.
 Partnership Firm’s Final accounts are similar
to Sole proprietorship firm’s final accounts
except the profit sharing & Capital A/c.

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Thank you for your attention.
Any Queries ?

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