Partnership and proprietorship are the two easy forms of organizations that are relatively easy to set up. The Indian Partnership Act 1932 defines a partnership as “the relation between two or more persons who have agreed to share the profits from a business carried on by either all of them”so in such cases two or more persons come together as a unit to achieve some common objective.
How To Create A Partnership Deed?
The following are the essential characteristics if you are wondering how to start a partnership firm:
- Name and address of the firm as well as all the partners
- Nature of business to be carried on
- Date of commencement of business
- Duration of the partnership (whether for a fixed period/project)
- Capital contribution by each partner
- The profit-sharing ratio among the partners
The above are the minimum essentials that are required in all partnership deeds. The partners may also mention any additional clauses. Some of the examples of additional clauses which may be mentioned in the partnership deed are mentioned below:
- Interest in the partner’s capital, partners’ loan, and interest.
- Salaries, commissions, etc.
- Method of preparing accounts and arrangements for audit.
- Division of task and responsibility, namely, the duties, powers, and obligations of all the partners.
- The rules to be followed in case of retirement, death, and admission of a partner.