Partnership deed is a contract between the partners, which covers the various terms needed for day to day management of the company. It contains who will be the active partner any interest on investment, remuneration of effective partner, function of dissolution, admission of new partner, etc.
Characteristics of Good Partnership Deed
A partnership deed can be described as a document that is prepared to describe important points so that the possibilities of conflict among partners are minimized to a great extent. Whenever a partnership is established, the partners are bound in two types of reliabilities. One is the person liability of each partner and the other is the collective liability of all the concerned associates. Now a days it is very easy to find out free sample agreement templates online without much effort.
Figure Out Important Conditions of Partnership Deed
The development of partnership requires an understanding among the partners by means of an agreement because partnership arises not from status but from contract. The partnership contract may be oral or in writing. Law makes partnership contract in written form. The document in which all the important conditions regarding the partnership business are written is called partnership.
Partnership agreements have a strong effect on taxation of both the individual partners and the partnership. The partnership contract decides the amount of tax partners pay and the kind of payment and distribution of capital. You can have a very good idea by downloading this free partnership agreement online.
An Appropriately Drafted Partnership Deed Contains the Following Points:
- The name of the company and the name of the partners.
- The place where the head office is located and the business carried on.
- Nature and types of business function.
- The amount contribution by the partners.
- The beginning and the duration of partnership.
- The percentage in which the profits are to be shared.
- The conditions for interest on capital, if any.
- Nature of loans and advances and the conditions for interest on loan.
- The amount of withdrawal to be made by the partners to any associate for this special assistance to the company.
- Conditions for maintenance of books of accounts and the process of audit of account.
- The name of the associates for signing cheques and other essential documents.
- Process for valuation of goodwill at the time of admittance and retirement.
- Arbitration stipulation for settlement of disputes among the partners.
- Process for dissolution of partnership and partnership firm.
- Conditions for determining the amount of investment payable to the retiring partner or to the heir of a deceased partner.
- The method of revaluation of liabilities and assets.
- The procedure of settlement in case of dissolution of partnership.
- Voluntary termination; the partnership may be demolished anytime by agreement of a super-majority of the partners, in which event the partners shall proceed with affordable promptness to liquidate the business of the partnership.
Where partnership deed is silent on any detail, the provisions of partnership act are appropriate. Get your partnership deed registered in Registrar of Company so that in any evaluate situation it will be valid and if there is any change in partners of any other situation, make sure you inform registrar or else there.