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Partnership Deed & Its Importance

Partnership Deed & Its Importance 

Partnership deed is the legal contract between the partners before starting the business. This agreement is made to solve a future disputes related to partnership business. It is important because there must be some terms and conditions that are agreed by all the partners. 
Partnership deeds cover all the information regarding registration of new partners like name and objectives etc…,. This paper is duly signed by all the members of the partnership to give legal approval.

Here  team of  Filing Bazaar helps  you with all legal services related  to Partnership firm  

The partnership deed should contain the following points:- 

1. Name and address of the firm.

2.  Names and addresses of the partners.

3.  The type and nature of the business the firm proposes to do.

4.  Amount of capital to be contributed by each partner and whether the capital accounts will be fixed or fluctuating.

5.Salary of partner - If any partner will be paid salary for the work done by him. 

6.The auditing period of the firm. 

7.Duration of partnership. 

8.Rules to be followed in case of admission of a new partner.

The importance of partnership deed:-

Having a partnership deed is not mandatory or compulsory by law but it is desirable because of the following reasons:

• It regulates the rights, duties, and liabilities of each partner.

• It helps to avoid any misunderstanding amongst the partners because all the terms and conditions of the partnership have been laid down beforehand in the deed.

• Any dispute amongst the partners may be settled easily as the partnership deed may be readily referred to. 
Hence, it is always the best course to have a written document (partnership deed) instead of oral agreements. 

Benefits that associated with a partnership firm are as follows: 

This sort of business entity is easy to start:

Greater Borrowing Capacity

This form of business enjoys tax savings. Here income tax is imposed after distribution of profit among partners. There is no double tax. In case of corporation, the income tax is imposed twice.  First on corporation’s profit and secondly, when it is disturbed to shareholders.    

• If there is a key employee in the firm of partnership and he wants to leave a job, he can be given a status of partner in the business with the mutual consultations of others partners. In this way key employees can be retained. 

• When it comes to any sort of business, the most amount of time it takes to start a process is with the decision process. The reason for this is the need to pass a resolution. However, this is one thing that a partnership firm does not need to partake in. To that end, the decision process is fast and it is reliable.

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