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Rights and Obligations of Partners

  The rights and obligations of partners are normally mentioned in the partnership deed. In case, the partnership deed does not specify them, then the partners will have rights and obligations as prescribed in The Partnership Act, 1932. These rights and obligations are given below:     Rights of partners   1. Every partner has a right to take part in the conduct and management of the firm’s business.   2. Every partner has a right to be consulted and express his opinion on any matter related to the firm. In case of a difference of opinion, the decision has to be taken by a majority. But important issues like an admission of a new partner, change in the firm’s business, alteration of profit-sharing ratio, etc., must be decided by unanimous consent of all the partners.   3. Every partner has a right to have access to, inspect and copy any books of accounts and records of the firm.   4. Every partner has the right to an equal share in the profits of the firm unless otherwise agreed by the
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Registration of a Partnership Firm

    Registration of a partnership firm is not mandatory under law, however, if the partners so desire may register the firm with the Registrar of Firms of the state in which the firm's main office is situated. A partnership firm may be registered at the formation or at any time thereafter.                      Image Source: Pexels Procedure for Registraion       In order to get a partnership firm registered, an application in a prescribed form must be filled with the Registrar of Firms. The application should contain the following information: 1. The name of the firm  2. The principal place of business of the firm 3. Names of other places where the firm's business is carried on. 4. Names in full and permanent addresses of the partners.  5. The date on which each partner joined the firm 6, Duration of partnership, if any.     The application should be signed and verified by each partner, then it is to be submitted to the Registrar of Firms of the area in which the main office of
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What is a Partnership Deed and what are the clauses it usually contains?

  Partnership Deed is a document containing the terms and conditions of a partnership business. It is an agreement in writing signed by all the partners duly stamped and registered. It defines the rights, duties, and obligations of partners. The partnership deed must not contain any term which is contrary to the provisions of the Partnership Act. Even though it is not necessary to have a written agreement, a written agreement is helpful in preventing and resolving disputes among the partners. The terms and conditions of a partnership deed can be changed with the consent of all the partners.     A partnership deed normally contains the following clauses: 1. Name of the firm. 2. Nature of the firm's business 3. The principal place of business. 4. Duration of partnership, if any 5. Names  and addresses of partners 6. Amount of capital to be contributed by each partner 7. The amount which can be withdrawn by each partner. 8. The profit-sharing ratio. 9. Rate of interest, if any 10. Amo
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Partnership- Meaning, Definition, Characteristics, Formation

The partnership form of the business organization came out from the limitations of the sole proprietorship business. When a business expands, a single person is unable to arrange the funds and bear the risks. He cannot manage all the functions of business by himself. Therefore, two or more persons join hands and combine their capital and skills to start a business.  Meaning of Partnership:         A partnership is a voluntary association of two or more persons who agree to carry on some business jointly and share its profits and losses. They combine their funds and skills to carry on business together. Definition by L. H. Haney :        Partnership is the relation existing between two persons competent to make contracts, who agree to carry on lawful business in common with a view to a private gain. Definition according to The Partnership Act 1932:      Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any one of them acting
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Joint Hindu Family Business

Joint Hindu Family business is one of the oldest forms of business organization in the country. It refers to a form of organization wherein the business is owned and carried on by the members of the Hindu Undivided Family( HUF). It is governed by Hindu Law. If a person is born in the family then he/she will automatically become a member of the business.     The business is controlled by the head of the family who is the eldest member and is known as Karta. The members have equal rights in the property of an ancestor irrespective of their gender (male or female). The members are known as Co-parceners. Examples: Reliance Industries Ltd., Mahindra & Mahindra Ltd. Haldiram's Pvt Ltd. Characteristics  1. Formation: For the formation of the Joint Hindu Family business there should be at least two members in the family and an ancestral property to be inherited by them. No agreement is required for the business because membership is by birth. 2. Liability:  The liability of all the me
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A sole trader whose business is expanding feels the need for additional capital and managerial assisstance. Should he employ an assitant or take a partner?

            A sole trader may want to expand his business at some point of time. At that time he may face the problem of  shortage of capital and managerial skills.  Two alternatives are available to him for solving this problem.  1. To Employ a paid assistant  2. To admit one or more partners     Employment of Paid Assistant    When the sole trader employs a paid assistant, he has the following advantages and disadvantages: Advantages a) Division of work: An assistant can be appointed whose expertise can be used for the benefit of the business. The sole trader can delegate some of his work to the assistant and can devote his time and attention to crucial matters of business. b) No share in profits: The assistant is paid a fixed salary. The assistant is not given a share in profits. c) Complete control: The assistant has no right to interfere in decision making. So, the sole trader retains full control over the business. d) Secrecy: The sole trader is not expected to share the secr
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Sole Proprietorship

       Sole Proprietorship is a popular form of business organization and it is the most suitable form of organization for small businesses. It is one of the oldest, simplest, and common form of business organization. Sole proprietorship form of business is established, financed, owned, and managed by a single person who is known as, Sole Trader or Sole Proprietor . The sole trader bears all the risks and he alone is responsible for all the profit and losses of his business. He may borrow funds and employ people to help him but the ultimate authority and responsibility lie in his hands. Therefore, Sole trader business is a one-man show. Definition of Sole Proprietorship by L.H. Haney        The individual proprietorship is the form of business organization at the head of which stands an individual as one who is responsible, who directs its operations and who alone runs the risk of failure. Definition by B.O. Wheeler       The sole proprietorship is that form of business ownership whic
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