Partnership Firm Process and Procedure- Class 12th Project

Thus, where A and B jointly purchased a tea shop and incurred additional expenses for buying pottery and utensils for the job, contributing the money in equal proportions and then leased out the shop on rent which was shared equally by them , it was held that they are only co-owners and not partners as they never carried on any business

• Sharing of Profits

This essential element provides that the agreement to carry on business must be the object of sharing profits amongst all the partners. Thus, there would be no partnership where the company is carried on with an altruistic motive and not for making a profit or where only one of the persons is entitled to the whole of the advantages of the business. The partners may, however, agree to share the benefits in any ratio they like. Sharing of losses not necessary

To constitute a partnership, the partners don’t have to agree to share the failures (Raghunandan vs. Harmasjee). It is open to one or more partners to agree to bear all the shortcomings of the business.

Moreover, how the profits/losses are to be shared should be expressly stated in the partnership deed. In the absence of this being mentioned in the partnership deed, the provisions of the Partnership Act, 1932, would apply, which state that the profits/losses should be distributed equally among all partners.

• Mutual Agency in a Partnership

The fifth element in the definition of partnership provides that the business must be carried on by all the partners or any (one or more) of them acting for them all, i.e., there must be an interactive agency. Thus, every partner is both an agent and principal for himself and other partners, i.e., he can bind by his acts the other persons and can be bound by the laws of other partners. The importance of the element of mutual agency lies in the fact that it enables every partner to carry on the business on behalf of others.

Types of Partnerships

• General Partnership

In a traditional partnership model, all the partners share in the profits and risks of the business. Each partner has unlimited liability for the debts of the company – your assets can be seized if your business owes money. If your partners do anything wrong with the business, you are also held responsible.

• Limited Partnership

Limited partnerships have two different types of partners: general partners and limited partners.

General partners are responsible for managing the business. They have unlimited liability (the same as a general partnership).

Limited partners are only liable for what they’ve contributed to the business – they can only lose the money they’ve invested. Limited partners do not manage the business.

• Limited Liability Partnership

A limited liability partnership protects the partners from the debts of the business or the actions of other partners.

Limited liability partnerships are only available to some professions:

• Chartered Accountants
• Certified management accountants
• Certified general accountants
• Medical doctors
• Chiropractors
• Dentists
• Optometrists
• Lawyers

ANALYSIS OF DATA:

Features of the partnership firm

The essential functions and characteristics of a partnership are:

• Agreement: The organization arises out of a contract between two or more persons.
• Profit-sharing: There should be an agreement among the partners to share the profits of the business.
• Legitimate business: The business to be carried on by a partnership must always be legal.
• Membership: There must be at least two persons to form a partnership. The maximum number is 20. But in the case of the banking business, the maximum is ten members.
• Unlimited liability: The liability of every partner is unlimited, joint, and several.
• Principal-agent relationship: Every partner is an agent of the firm. He can act on behalf of the firm. He is responsible for his acts and also for the deeds done on behalf of the other partners.
• Corporate management: The firm and the partners are one. When a contract is made in the name of the firm, all the partners are responsible for it individually and collectively.
• Non-transferability of shares: A partner cannot transfer his stock of interest to others without the consent of the other partners.

Conclusion of Partnership firm Process and Procedure:

According to the above definition of a partnership firm, we can describe the following characteristics of a partnership firm:-

• There should be a proper contract between the partners, which shall state all the terms and conditions of the partnership firm. The agreement clearly will show the rights and liabilities of the partners, capital to be employed by the partners, the interest on money of the partners, the salary and other remuneration to the partners, the admission of new partners, the dissolution of the partnership firm, etc.
• Nothing is definite in the Indian Partnership Act in respect of several partnership firms. Still, as per the Company Act, there should not be more than ten persons in the case of banking business and 20 persons in other businesses. Otherwise, the partnership shall be deemed illegal.
• The partnership firm should be formed for doing business, and the aim of the business firm should be to earn a profit. For example, Mr. X and Mr. Y agreed to go on a pleasure trip and agreed to divide the expenditure 50:50; it is not a business. Hence, it will not be treated as a partnership firm.
• The profit should be divided between the partners after the end of the financial year as per the agreement. The benefit cannot be carry forwarded in the case of the partnership firm.
• The business can be carried out by one partner or a few partners or by all.

DISCUSSION:

Do you want to minimize your record-keeping, audit, and administrative requirements?

There is no provision for the regular meeting of the Board and members for LLPs. Partners can decide when and how to meet decide on delegation of powers etc. However, the rule exists that LLP should maintain a minute book. However, the Quarterly Board of Directors meeting and the annual shareholding meeting is mandatory for a limited company. If you want to lower your liability with regards to paperwork and administrative activities, opt for an LLP business structure.

Also, Companies are mandatorily required to get their win audited annually, whereas, for LLPs, only those having turnover more than Rs.40Lacs or Rs.25Lacs contribution in any financial year are required to get their accounts checked annually as per the LLP Act.

SUGGESTION:

There are different sorts of business to business partnerships that every business proprietor, perhaps follow to develop their businesses. The great motto is behind any business associations is to find out new customer leads and transform entirely into enhanced revenue and sales for all organizations.

Partnership in business facilitates companies to progress in processes speedily and reduces all financial crisis-related to obtaining new clients. A successful collaboration provides capability in particular sectors and also increases the production of products accessible more services to the customers. Though, lots of companies do not succeed abruptly after contracts are approved, just because of failure to fix divergence that takes place during the execution of the business deal.

However, all small matters can twist into big dilemmas that exterminate every successful business partnership. But there are significant benefits to the partnerships that ensure that the organization provides essential value to both parties’ relationships. Building business associations with retailers generally create a tremendous economic sense, along with help to pursue sole business opportunities.

Building an effective and lasting business partnership is not an easy task ever. Still, when you come to the right place and the right people, it’s great to associate or enhance the right relationship as a partner in the business. Maintain open and transparent communication between you and your team members and partner of your organization that will help further stay remain with mutual agreement.

ACKNOWLEDGMENT:

My profound gratitude to all the faculty members of the Department, for their timely assistance and encouragement throughout my research work.

I duly acknowledge the encouragement and support of the research scholars in the department, and all my colleagues and friends.

It gives me immense pleasure to take the opportunity to all the people who are directly or indirectly involved in the completion of my project based on Partnership Firm Process and Procedure.

With deep reverence, I offer my deepest gratitude _____, without whom this project could not have been fulfilled.

Lastly, I thank Almighty, my parents, family members, friends, and teachers for their constant encouragement and support, without which this project would not be possible.

Name of School/College

BIBLIOGRAPHY / REFERENCE :

1. http://www.yourarticlelibrary.com/partnership-firms/partnership-firms-definition-features-advantages-and-disadvantages/40804
2. http://www.commercevilla.com/partnership-firm.html
3. https://quickbooks.intuit.com/in/resources/legal/registration-procedure-for-partnership-firms-in-india/
4. https://en.wikipedia.org/wiki/Partnership
5. https://accountlearning.com/partnership-features-advantages-disadvantages/
6. http://www.sterlingccpl.com/bizstart-partner.php
7. https://inc42.com/resources/choose-best-business-structure-company/

DOWNLOAD PDF OF THE PROJECT PARTNERSHIP FIRM PROCESS AND PROCEDURE

Password: hscprojects.com

Download Partnership Firm Process and Procedure- Class 12th Project PDF