A PARTNERSHIP IS A KIND OF BUSINESS WHERE A FORMAL AGREEMENT BETWEEN TWO OR MORE PEOPLE IS MADE. THEY AGREE TO BE CO-OWNERS, DISTRIBUTE RESPONSIBILITIES FOR RUNNING AN ORGANIZATION AND SHARE THE INCOME OR LOSSES THAT THE BUSINESS GENERATES. THESE FEATURES OF PARTNERSHIP ARE DOCUMENTED IN A DOCUMENT WHICH IS KNOWN AS PARTNERSHIP DEED.
WHAT IS A PARTNERSHIP DEED?
PARTNERSHIP DEED IS A PARTNERSHIP AGREEMENT BETWEEN THE PARTNERS OF THE FIRM WHICH OUTLINES THE TERMS AND CONDITIONS OF THE PARTNERSHIP BETWEEN THE PARTNERS, THE PURPOSE OF A PARTNERSHIP DEED IS TO PROVIDE CLEAR UNDERSTANDING OF THE ROLES OF EACH PARTNER, WHICH ENSURES SMOOTH RUNNING OF THE OPERATIONS OF THE FIRM.
REGISTRATION OF PARTNERSHIP DEED:
ALL THE RIGHTS AND RESPONSIBILITES OF EACH MEMBER ARE RECORDED IN A DOCUMENT KNOWN AS A PARTNERSHIP DEED. THIS DEED CAN BE ORAL OR WRITTEN; HOWEVER, AN ORAL AGREEMENT IS OF NO USE WHEN THE FIRM HAS TO DEAL WITH TAX. A FEW ESSENTIAL CHARACTERISTICS OF A PARTNERSHIP DEED ARE:
- THE NAME OF THE FIRM.
- NAME AND ADDRESSES OF THE PARTNERS.
- NATURE OF THE BUSINESS.
- THE TERM OR DURATION OF THE PARTNERSHIP.
- THE AMOUNT OF CAPITAL TO BE CONTRIBUTED BY EACH PARTNER.
- THE DRAWINGS THAT CAN BE MADE BY EACH PARTNER
- THE INTEREST TO BE ALLOWED AN CAPITAL AND CHARGED ON DRAWINGS.
- RIGHTS OF PARTNERS.
- DUTIES OF PARTNERS.
- REMUNERATION TO PARTNERS.
- THE METHOD USED FOR CALCULATIONS GOODWILL.
- PROFIT AND LOSS SHARING RATIO.
DOWNLOAD FORMAT OF DEED OF PARTNERSHIP
IMPORTANCE OF PARTNERSHIP DEED
A FEW IMPORTANT ADVANTAGES OF A WELL-DRAFTED DEED ARE LISTED:
- IT CONTROLS AND MONITORS THE RIGHTS, RESPONSIBILITY AND LIABILITIES OF ALL THE PARTNER.
- AVOIDS DISPUTE BETWEEN THE PARTNERS.
- AVOIDS CONFUSION ON PROFIT AND LOSS DISTRIBUTION RATIO AMONG THE PARTNERS.
- INDIVIDUAL PARTNER'S RESPONSIBILITIES ARE MENTIONED CLEARLY.
- PARTNERSHIP DEED ALSO DEFINES A REMUNERATION OR SALARY OF THE PARTNERS AND WORKING PARTNERS. HOWEVER, INTEREST IS PAID TO EACH PARTNER WHO HAS INVESTED CAPITAL IN THE BUSINESS.
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