Business Strategy : PARTNERSHIP

Business Strategy PARTNERSHIP

Partnership is a sole basis of Business growth and development with unto trust each other.

The Partnership firm is a another form of Business organization, in which profits, losses and capital is being shared between the owners.

According to the  India Partnership Act, 1932 section 4 defines partnership as “a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”.

There are various Type of Partnership Included depending upon the active participation in business process –

  • Active partners – The partners responsible for debts and profits in firm with their direct involvement
  • Dormant partners – They are sleeping partners does not directly involved in daily business activity. They only invest in capital and bear risk or profits.
  • Nominal partners – The partners include partner as a name only. He does not invest, share profits and does not conduct the business but liable.
  • Minor as a partner -The person under 18 cannot be a partner of firm but in special cases can be admitted. Only profit share and loss are limited defined.
  • Partner by estoppel – Person falsely represent as a firm partner is called partner by estoppel.
  •  Partner by holding out – If partners declare another person as firm partner is remain silent after the declaration, he is also liable to loss and profit of firm called as partner by holding out.

Feature of Business Organization 

  • Number of Partner –  At least two members required. 10 in case of banking and 20 in case of other business.
  • There should be an agreement between.
  • Lawful business –  social or philanthropic work is not termed as partnership business. also smuggling, black marketing etc.
  • Competence of partners
  • Sharing profit
  • Unlimited liabilities

The partners provide the necessary capital, run the business jointly and share the responsibility. There is a agreement between the partners called a ‘PARTNERSHIP DEED’ it states the duty to decide (i) the amount of capital to be contributed by each one (ii) who will manage (iii) how will the profits and losses be shared.

Advantages

  1. Easy to form
  2. Availability of large resources
  3. Better decisions
  4. Flexibility in operations
  5. Sharing risks
  6. Benefits of specialization

Dis-Advantages 

  1. Unlimited Liability
  2. Uncertain Life
  3. Lack of Harmony
  4. Limited Capital
  5. No transferability of share
  6. Absence of ultimate authority

Partnership is an appropriate form for medium sized business involved medium capital intensive.

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