Basic of Partnership
A partnership is an association of two or more individuals to carry on, as co- owners, a company and also to discuss its profits and losses. The persons who have the company are independently called spouses and collectively called as Partnership Business.
A partnership companies neither a legal entity nor a juristic person. It is simply a compendious name given to venture for the sake of convenience.
Though a partnership does not have any legal existence, it is considered a component of assessment under income tax act and under another tax legislation.
Relation of partnership arises from contract not from status.
Who can become a partner?
- Just legal and nature person has the ability to become a partner
- Only such persons who are able to contract may enter into a partnership.
- A small cannot be a partner in the firm but he could be admitted to the benefits of venture through his guardian with approval of spouses. Minor is eligible for a share in the profits but not losses. His share in the firm is liable for the action of the firm, but he isn’t personally liable.
- Hindu undivided family (HUF) cannot enter in to partnership, however a Karta of HUF may become associate with others in his representative capacity. But when a Karta of joint Family enters into a partnership with strangers, then the other members of their family do not ipso facto become partner in that firm.
Formation of partnership
An agreement is essential for the creation of a partnership, this agreement could be produced through an oral or a written one. However to prevent future disputes it’s always advisable to have an appropriate deed of partnership.
Admission of partner
Someone could be introduced to some company only with the consent of all current partners. A spouse so introduced doesn’t so become answerable for any act of the business done until he becomes a partner.
Retirement of partner
A spouse may retire in a company with the approval of all other partners. In the event of a partnership at will any partner can retire by providing notice in writing to each of the other partners of his intention to retire.