Partnership
firm is a type of business in
which two or more individuals join together for jointly carrying the business. The Indian Partnership Act, 1932, Section
4, defined partnership as “the relation between persons who have agreed to share the
profits of a business carried on by all
or any of them acting for all”.
The
persons who maintain the partnership
business are individually called ‘partners’ and collectively called as
‘partnership firm’. The name under which their partnership business is carried
on called as ‘Firm Name’. In a simple way, the firm is nothing but an
abbreviation for partners. The pool money,
skills, and other resources, share profit and loss in accordance with terms of the partnership
agreement.
Fundamental Characteristics
of Partnership are
according to Section 4,
§ There
should be an agreement between the persons who wants to be partners.
§
The purpose should be carrying on of
business
§ The object should be of earning and sharing
profits.
§ The
business of the firm should be carried on by all of them or any of them acting
for all, i.e.
in the mutual agency.
Limited Liability Partnership entities, the world wide recognized form of business
organization has been introduced in India by Limited Liability Partnership Act,
2008. It is a partnership in
which partners have limited liability.
Features of LLP (Limited Liability Partnership) are:
1. As
a corporate body separate from its members. It has a perpetual succession.
2. Every LLP shall have at least two partners
and all the partners are the agents of
LLP.
3. It is a form of business which is
organized and operates on the basis of agreement.
4. It is easy to become or leave as a partner
under LLP.
5. The ownership can easily be transferred
under this.
6. As a juristic person, LLP can sue or be sued in its own name. The partners are
not liable to be sued for the debts of the LLP.
7. No exposure to personal assets of the
partners except in the case of fraud.
8. Less requirement as to the maintenance of statutory records.
9. Less Government Intervention.
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