INTRODUCTION

• Group of person join to do business
• Aim is to maximize profit
• One may be good in management, the other may be good in mathematics, so, they join together.
• Min of 2, maximum of 20
• Maximum for bank and fin institutions is 10
• Unlimited number of partners for firms like accountants, brokers, estate agents, land agents.

PEOPLE HAVING DIFFERENT EXPERTISE IN DIFFERENT FIELDS JOIN TOGETHER

WHY PARTNERSHIP?

• More capital than a that of a sole trader
• More profit therefore
• Benefit from expertise, manage business more efficiently
• Share responsibilities

HOW PARTNERSHIP?

PARTNERSHIP AGREEMENT

THE PARTNERSHIP ACT 1890 STATES THAT AN AGREEMENT SHOULD HAVE

• Capital contribution
• Interest to be allowed on capital contributed
• Interest to be charged on drawings
• Any salary, bonus or commission payable to partners
• Profit or loss sharing ratio

NO PARTNERSHIP AGREEMENT MADE. WHAT WILL PREVAIL?

• Equal share of profit or loss
• No interest on capital
• No interest on drawings
• No salary, bonus, commission
• Interest on loan from partners at 5% per annum

LIMITED PARTNER

UNLIMITED PARTNERS

FOR NEXT CLASS

• Read on disadvantages of partnership
• Jot down the main points
• Prepare on Appropriation account and current account in copybook
• (Page number will be sent on WhatsApp group, and supplementary notes)

TYPES OF PARTNERS

• Limited partner - liability is limited to amount invested. Will not lose personal assets in case of bankruptcy
• Unlimited partner - general partner - risk losing personal belongings in addition to his capital, to pay debts of business.
• There must be at least one general partner in a partnership
• What advantage May a general partner have despite having unlimited liability?

Untitled Slide