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Any other terms and conditions to run the business.Name and address of the partners and the firm.Salary or commission payable to the partner, if any.The amount of capital contributed by each partner.Whenever you think of joining hands with others to start a partnership business, first of all, there must be an agreement between all of you. If the number of members exceeds this maximum limit, then that business cannot be termed as a partnership business. You know that the members of the partnership firm are called partners.īut do you know how many persons are required to form a partnership firm? At least two members are required to start a partnership business.īut the number of members should not exceed 10 in the case of banking business and 20 in case of other business. Features of Partnership Form of Business OrganizationĪfter having a brief idea about the partnership, let us identify the various features of the partnership form of business organization. In a way, the firm is nothing but an abbreviation for partners. The name under which partnership business is carried on is called “Firm Name’. This business may be earned on by all or any of them acting for all the persons who own the partnership business are individually called ‘partners,’ and collectively, they are called as firm’ or partnership firm. Now, we can define partnership as an association of two or more persons – who have agreed to share the profits of a business that they run together.
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Hanson, “a partnership is a form of business organization in which two or more persons up to a maximum of twenty join together to undertake some form of business activity”. The Uniform Partnership Act of the USA defined a partnership “ai an association of two or more persons to carry on as co-owner a business for profit”.Īccording to J.L. “The partnership is the relation which subsists between persons carrying on business in common to profit” British Partnership Act, 1890 (Sec-1). The Partnership Act of America says, “The partnership is an association of two or more persons to carry on as co-owners a business for profit.”
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The Partnership Act-1932 says, “Partnership is the relation between persons who have agreed to share profits of a business carried on by any of them acting for all.”
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Section 4 of the Partnership Act, 1932, defines partnership as “a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.” 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.