A partnership is a very common form of business organisation. Especially in India, partnership firms are generally finding favour when the business is medium scale. So it is important that we learn about the Partnership deed and the registration of such deeds.
A partnership deed, also known as a partnership agreement, is a document that outlines in detail the rights and responsibilities of all parties to a business operation. It has the force of law and is designed to guide the partners in the conduct of the business. It is helpful in preventing disputes and disagreements over the role of each partner in the business and the benefits which are due to them.
The following points are to be mentioned in the partnership deed.
- Name of the partners.
- Name and nature of the business.
- Capital contributed by each partner.
- The Ratio of Gain or Loss.
- The Rate of interest if allowed on partner’s capital.
- Salary if to be paid to a partner for doing an extra job.
- The Maximum amount of withdrawal of a partner during a particular period.
- Whether the partner’s capitals are to be maintained on fixed or fluctuating methods.
- Life of partnership business.
- The Rate of interest on drawing if any to be charged.
- Interest on partner’s loan.
- The Financial period for determining Gain or Loss of the business.
- Method of valuation of goodwill at the time of admission, a retirement of a partner, mergers of business and dissolution of a business.
- Method of computing the amount due to the retiring partner or to the successors of the deceased partner.
- The way or procedure of payment of the amount due to the retiring partner or executors of the deceased.
- The Clause regarding arbitration in case of dispute.
- The Procedure of dissolution of the firm.
- Treatment of assurance policy if any.