Features of Partnership Firm
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| Features of Partnership Firm |
1) Agreement :- Partnership is a result of agreement between partners. It could be written or oral. A written agreement is preferred so that it can be used as a proof in the court of law & such written agreement is known as “Partnership Deed.”
2) Number of Partners :- Minimum two partners are needed to start partnership firm and the maximum number of partners are fifty according to companies Act 2013 (Amended in 2014)
3) Lawful business :- Business undertaken by partnership should be lawful. It cannot undertake business which is not allowed by state. The definition of Partnership also does not permit any illegal business.
4) Sharing of Profit and losses :- The purpose of partnership is to earn maximum profits. Partners have to share profits & losses according to the ratio given in the agreement. If the agreement is silent about the ratio then profit and loss sharing will be equal.
5) Unlimited Liability :- The liability of partners is unlimited joint and several that is, partners are liable till the last rupee in their pocket. If assets of business is not sufficient to pay liabilities, then personal property of partners can be used. If anyone of the partner is declared in solvent then his liability will be borne by the solvent partner.
6) Registrations :- Registration of partnership firm is compulsory only in the state of Maharashtra with effect from 1st April 2005. According to Indian Partnership Act, 1932, registration of partnership firm is optional it means a firm may or may not be registered. Registration of firm merely certifies its existence and it is a process of entering the name of Partnership Firm in the register of Registrar.
7) Joint Ownership & Management :- Each partner is joint owner of the property of the firm, so no partner can use property for personal use. All partners have equal rights in managing the firm. So all partners are jointly responsible for the management of firm.
8) Principal and Agent :- Each partner works in two fold capacities i.e. principal and Agent. A partner acts as a principal of the firm with outsiders and with other partners he acts as an agent.
9) Dissolution :- A partnership firm can be dissolved through agreement between the partner. If a partner wants to close the firm he can dissolve the firm by giving fourteen days notice. The firm can also be dissolved if a partner dies or retires, becomes insolvent or insane.