PARTNERSHIP

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"With The Introduction Of LLP In India, Partnership Firms Are Fast Losing Their Prevalence Due To The Added Advantages Offered By A LLP"

A General Partnership is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in the Partnership Deed. This structure is thought to have lost its relevance since the introduction of the Limited Liability Partnership (LLP) because its partners have unlimited liability, which means they are personally liable for the debts of the business. However, low costs, ease of setting up and minimal compliance requirement make it a sensible option for some, such as home businesses that are unlikely to take on any debt. Registration is optional for General Partnerships.

The formation of a partnership requires a voluntary “association” of persons who “co-own” the business and intend to conduct the business for profit. There are two types of Partnership firms, registered and unregistered. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm due to the added advantages.

Persons can form a partnership by written or oral agreement, and a partnership agreement often governs the partners’ relations to each other and to the partnership. Generally, each partner is jointly and severally liable with the partnership for the obligations of the partnership and for the wrongful acts or omissions of a copartner.