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Partnership and its needs

August 7, 2009

Partnership :

A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

Partnership Businesses

When one is starting a business, one may form a sole proprietorship when the business is small.

The problem with this kind of business is,

* It cannot grow beyond a certain limit. This is because a sole proprietorship will not be readily sponsored by banks other sources of finance.

* The amount of money that the sole proprietor can contribute to the business alone is not very high.

* The sole proprietor has to take wise decisions in running the business. If he is unable to do so, the business will not be very successful and will not grow.

For all the above reasons, one may choose to form a partnership firm right from the start or later change their firm to a partnership firm.

Before a partnership is formed, a partnership deed should be prepared. This partnership deed may be oral or in writing. However it is wise to make sure that the partnership deed is in writing so that future conflicts may be resolved.

The sample partnership Deed or Agreement form:

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