Two or more than two people are involved in a partnership company who agree to share their resources and form a business where they will share the profits, losses and will bear the risks together. There are also different types of partnerships where partners have limited liability according to their shares in the company. The one very interesting type of partner is the silent partner. A silent partner is the type of partner that is not involved in the day-to-day activities of the business but has shares in the company.
What are the types of businesses that are best for partnership?
When there are a group of professionals that are in the same line of work and each partner has an active role in running the business then it is suitable for the partnership. The types of professionals that are included are medical professionals, consultants, architects, finance and investing, lawyers, accountants, etc.
What are the advantages and features of Partnership?
* Two or more people can be there
According to the Partnership Act, 1956 association of more than 10 people if the company is a banking business and 20 people should be there in another type of business otherwise it will e considered illegal according to the law. More than 20 people should be registered as joint-stock companies. In the earlier act, that is, Partnership Act 1932, the maximum limit on the partner was not mentioned.
Registration of the company is not legally required. However, if it is not registered then there are certain legal benefits that a company can not enjoy.
* Profit sharing
The profits that are earned by a company are shared amongst the partners in a proportion it has been agreed upon. If some employees or creditors are sharing the profits then they are not considered partners unless there is written proof or agreement between the parties.
* Lawful activities
The business and the partnership can only be considered legal if the lawful activities are carried out by the partners. Not only the business must be conducted legally but also the activities that it carries and the goods and services it offers should be legal and according to law.