What is Partnership Business and Characteristic of Partnership Business is Different forms of business have evolved gradually. Partnership may be called a secondary development after proprietorship. When two or more persons develop a contractual relationship between or among them for doing certain types of business, it is called a partnership business. To cope with limitation of single venture (proprietorship) joint venture was started. Some definition of proprietorship
What is Partnership Business?
According to Indian partnership Act of 1932: “Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any o f them action.
According to British Partnership Act of 1890: “Partnership is the relation which exists between persons carrying on business in common with a view to profile.
The Uniform partnership Act of the U.S.A.: “partnership is an association of two or more persons to carry on as co-owner a business for profit.’
According to Professor Thomas: “A partnership is an association of people who carry on business together for the purpose of making profits.
Thus, partnership is an association of persons to carry on certain kind of business for the purpose of making profit.
Characteristics of partnership Business
Different Characteristic of Partnership Business is as follows:
- An Association of persons: A partnership is an association of two or more persons. According to partnership Act of 1932, the number of partner must be 2 to 20 in case of normal business and 2 to 10 in case of banking business.
- Contractual relationship: Contract is called the essence of partnership business. The right and duties of partners are written in the contract. In case of absence of contract or provision’s in the provisions of partnership act will prevail.
- Combined Capital: The capital of a partnership business is contributed by all partners equally or in some agreed upon proportion.
- Unlimited liability: Like proprietorship business, the liability of partners in the partnership business is unlisted the partner’s personal asset is also liable for the business debt.
- Jointy Management and Control: The partners make an assignment of duties and responsibility among them to run the business.
- Division of profit or loss: The partners in the partnership business obtain profit or bear loss acceding to agree upend provision equally or in proportion to contributed capital
- Registered Status: Unlike proprietorship, partnership may be registered with appropriate authority by the government.
- Medium type business: Partnership can operate business, usually , large than that possible by a proprietorship business.
- A combination of capital and skills: As different persons associate in the partnership, so there is a combination of capital and skills.
- Dissolution: A partnership may be dissolved any time. Any conflate between or among partners may cause an end to partnership and / or business also.
Thus, partnership is a business of joint ownership and joint management.