Suitability Of Partnership Form Of Business Organisation
We have already learnt that persons having different ability, skill or expertise can join hands to form a partnership firm to carry on the business. Business activities like construction, providing legal services, medical services etc. can be successfully run under this form of business organisation. It is also considered suitable where capital requirement is of a medium size. Thus, business like a wholesale trade, professional services, mercantile houses and small manufacturing units can be successfully run by partnership firms 3.12 Formation Of Partnership Form Of Business Organisation
The following steps are to be taken in order to form a partnership firm:
(a) Minimum two members are required to form a partnership. The maximum limit is ten in banking and 20 in other businesses.
(b) Select the like-minded persons keeping in view the nature and objectives of the business.
(c) There must be an agreement among the partners to carry on the business and share the profits and losses. This agreement must preferably be in writing and duly signed by the all the partners. The agreement, i.e., the partnership deed must contain the following:
(i) Name of the firm
(ii) Nature of the business
(iii) Names and addresses of partners
(iv) Location of business
(v) Duration of partnership, if decided
(vi) Amount of capital to be
contributed by each partner
(vii) Profit and loss sharing ratio
(viii) Duties, powers and obligations of partners. (ix) Salaries and
withdrawals of the partners
(x) Preparation of accounts and their auditing. (xi) Procedure for
dissolution of the firm etc. (xii) Procedure for settlement of disputes
(d) The partners should get their firm registered with the Registrar of Firms of the concerned state. Although registration is not compulsory, but to avoid the consequences of non- registration, it is advisable to get it registered when it is setup or at any time during its existence. The procedure for registration of a firm is as follows.
(i) The firm will have to apply to the Registrar of Firms of the concerned state in the prescribed form.
(ii) The duly filled in form must be signed by all the partners.