An extremely popular form of business organization in India due to its relatively easier process of setting up, a partnership firm has relatively fewer requirements of statutory compliance required for incorporation.
An extremely popular form of business organization in India due to its relatively easier process of setting up, a partnership firm has relatively fewer requirements of statutory compliance required for incorporation. The following are the steps required to do a partnership deed.
A partnership deed is a form of an agreement which is undertaken to list out and undertake the different rights, duties, the shares of the profits of the firm and other such obligations between partners. The partnership deed doesn't need to be written; it may be oral.
The next step for the construction of a partnership deed is giving a name to the partnership firm. The name of the firm can be anything as desired by the partners as long as it does not show any form of sanction by the government of India (Section 58(3)) or the name does not reflect a similarity with another firm already in existence.
The first clause contained in a partnership deed would be the business of the firm. The business of the firm is the classification in which the business to be conducted by all the partners of the firm is to be mentioned.
The next clause of the partnership deed would be the duration of the partnership. The duration of the partnership is the classification of the duration of the partnership, whether it be for a limited amount of time or the duration of a single project.
The next clause of the partnership deed is the share of the profits of the partnership firm. The share of the profits lays down the classification of the ration in which the profits of the partnership firm are to be distributed amongst the partners.
The next clause of the partnership deed is the salary and commission of the partners. The salary and commission of the partners classify the amount of salary or commission that a partner of a partnership firm is to be paid.
The next clause of the partnership deed is the capital contribution of the partners. The capital contribution of the partners in such a deed classifies the capital contribution required and contributed by the partners and therefore, the amount of interest they are payable to for their contribution.
The next clause of the partnership deed is the accounts and audits clause about the firm. The accounts and audits clause of the agreement usually sets out the methods used for the preparation of the accounts and the arrangements required for the audit of the firm.
Apart from the general clauses mentioned above, a partnership deed usually seeks to list out other essential clauses such as the policy of the partner’s drawings from the firm, the loan amounts and requirements of partners, other daily, short term and long term duties and responsibilities of a partner and lastly the retirement details of a partner.
Lastly, upon the successful completion and collection of all the documents required for the clauses as mentioned above, the final step in forming a partnership deed is for it to be created following the rules of the Indian Stamp Act on stamp paper and the distribution of a copy of the partnership deed to all the partners of the firm.
As discussed above, a partnership firm is governed by the Indian Partnership Act is one of the most important forms of the business organization present in the country. Therefore these steps can be followed for the successful formation of a partnership deed during the incorporation process of a partner country.
India is a democratic country and the constitution is the highest authority in our country. Also the preamble of the constitution starts with ‘we the people of India’
The concept of rights and duties are the most famous of all laws. Without right and duty no law is complete. Where there is a right there is a correspondence duty to it.