Define parthenship.Explain the characteristics of partnership
Answers
Answer:
Explanation:
Definition: The term partnership, is used to mean a business structure wherein two or more individuals, come together for undertaking a lawful business and have agreed to shMembership: At least two persons are required to begin a partnership while the maximum number of members is limited to 100. Further, all the individuals entering into partnership must be legally competent to do so, as they have to enter into a contract to become partners. Thus, minors, insolvent and lunatic persons cannot become members, but a minor can be admitted to partnership, to share profits.
Unlimited liability: The members of a partnership have unlimited liability, i.e. they are collectively and individually liable for the firm’s debts and obligations. So, if in case business assets are not adequate to repay liabilities, personal assets of all or any partner can be claimed by the creditors to realise the outstanding amount.
Sharing of profit and loss: The main purpose of the partnership is to share profit in the agreed ratio. However, in the absence of any agreement between partners, the business profits or losses are divided equally among all the partners.
Mutual Agency: The partnership business is undertaken by all the partners or any of the partner, who acts on behalf of all the partners. So, every partner is a principal as well as an agent. Further, the acts of partners bind each other as well as the firm.
Voluntary Registration: The registration of partnership is not mandatory, but it is recommended, as it offers certain benefits, e.g. in case of any conflict among partners, any partner can file suit against other partner or if there is any dispute between firm and outside party, then also the firm can file a case against that party.
Continuity: There is a lack of continuity in partnership, like death, bankruptcy, retirement or insanity of any partner can lead the partnership to end. Although, if the remaining partners want to continue operations, they can do so by a fresh agreement.
Contractual Relationship: The relation subsisting between partners is due to the contract, which may be oral, written or implied.
Transfer of interest: Mutual consent of all the partners is a must for transferring the interest in the firm to any external party.are the profits and losses arising from it.
Characteristics of Partnership:
Membership: At least two persons are required to begin a partnership while the maximum number of members is limited to 100. Unlimited liability: The members of a partnership have unlimited liability, i.e. they are collectively and individually liable for the firm's debts and obligations.
** Characteristics of a Partnership. A partnership is an unincorporated association of two or more individuals to carry on a business for profit . Each partner shares in the net income or loss of the partnership and includes this amount on his/her own tax return.
**There are three relatively common partnership types: general partnership (GP), limited partnership (LP) and limited liability partnership (LLP). A fourth, the limited liability limited partnership (LLLP), is not recognized in all states.
**there are 5 elements which constitute of a partnership namely: (1) There must be a contract; (2) between two or more persons; (3) who agree to carry on a business; (4) with the object of sharing profits and (5) the business must be carried on by all or any of them acting for all.
**A partnership is when 2 or more people operate a business as co-owners and share income. All co-owners (i.e. partners) act on behalf of each other in the business. Like the sole trader structure, a partnership entity is not separate from its operators.
NOTE THERE A PARTNERSHIP ALSO BECOMES ILLIGAL :
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