According the partnership Act 1932 it is defined in the following words :
" Partnership is the relation between persons who have agreed to share profit of business carried on by all or any of them acting for all."
Partnership is a mean of bringing together the persons who can contribute capital, skill for the expansion of business. In the ordinary business number of partners shall exceed than twenty. In case of banking business they may not exceed than ten. This type of business organization is very popular in our country.
MAIN CHARACTERISTICS OR FEATURES OF PARTNERSHIP
1. Agreement :-
Without agreement partnership can not be formed. The agreement may be written or oral. But it must be written on settle the disputes.
2. Registration :-
It is not necessary that a partnership may be registered. But in case of registered firm many problems can be created.
3. Number of Partners :-
In a partnership there should be at last two partners. In ordinary business the partners must not exceed the twenty. In case of banking not more ten.
4. Profit and Loss Distribution :-
The basic aim of partnership is to earn profit. This profit is distributed among the partners according their agreement. In case of loss also all the partners share in it.
5. Business :-
The object of the partnership it to carry on the business. It may be production or trading. It should be according the laws of the state.
6. Unlimited Liability :-
The liability of the partner is not limited to his invested amount. In case of loss the private property of the partner also used to pay the business obligations.
7. Entity :-
Law has not granted it any legal entity, it is not independent from the partners. It has not separate entity from its members.
8. Share in Capital :-
According to the agreement every partner contributes his share. It is not necessary all the partners should contribute equally. Some people provide only skill and ability to become a partner.
9. Management :-
All the partners can participate actively in the business management. Sometimes only few persons are allowed to handle the business affairs.
10. Payment of Tax :-
Every partner pays the tax on his share of profit individually.
11. Co-Operation :-
For the successful partnership mutual co-operation and mutual confidence is an important factor.
12. No Audit :-
In the partnership there is no restriction for the audit of accounts. So this type of organization may operate freely.
13. Partners are Agent :-
Every partner stand as an agent and principal to one another. In the position of an agent one can do contract with other parties on behalf of the firm.
14. Transferability of Shares :-
No one partner can transfer his share to any other person without the consent of the existing partners.
15. Dissolution :-
It is a temporary form of business. It operates at the pleasure of the partners. It is dissolved if a partner leaves, dies or declared bankrupt or insane. Partners can also dissolve it by obtaining the degree from the court.