Partnership Essay

Q-1Define compact and explain the features of union? Ans. A alliance is the relationship existing between two or much persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the lettuces and losses of the business. A spouseship must file an annual education return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it passes through any(prenominal) profits or losses to its partners. Each partner includes his or her share of the confederacys income or loss on his or her tax return. Partners are not employees and should not be issued a Form W-2. The partnership must cede copies of Schedule K-1 (Form 1065) to the partners by the date Form 1065 is required to be filed, including extensions. If you are a partnership or a partner (individual) in a partnership, use the in institution in the charts below to help you construe some of the form s that you may be required to file. a)The main features of partnership are given below1.Agreementthither must be agreement between the parties concerned. This is the most important characteristics of partnership. Without agreement partnership layaboutnot be formed. No agreement no partnership. that only competent persons are entitled to view as a contract. in that location are some provisions contained in the partnership agreement. These are determined clearly before the counterbalance of business. But it differs from business to business. This documents may be write or oral. But it must be written so that disputes may be settled according to the provisions of agreement.2.Number of PartnershipThere should be more(prenominal) than one person to form a partnership. But in that location is restriction for the maximum human action of partners. In case of ordinary business, the partners must not exceed 20 and in case of banking must not exceed 10 (before nationalization).3.Busin essThe object of the formation of partnership is to carryon any type of business. It may be manufacturing or merchandise type small or large scale business. But it should not be punishable business in the landed estate concerned.4.Profit motiveThe basic motive of the formation of partnership is to earn profit. This profit is distributed among the partners according to agreed proportion. If there is loss it will be sustained by all partners overleap the minor.5.Conduct of BusinessThe business of partnership is conducated by all the partners or any or them acting for all. But each partner is allowed to participate in the management by law.6.EntityIt has no separate entity apart from its members. It is not independent of the partners. Law has not granted it any legal entity.7.Unlimited liabilityThis is the prominent feature of partnership that the liability of each partner is not limited to the amount invested but his private property is in like manner liable to pay the business ob ligations.8.InvestmentEach partner contributes his share in the capital according to the agreement. well-nigh persons become partners without investing any capital to the business. But they devote their time, energy and ability to their business or else of capital and receive profit.9.Transferability of shareThere is restriction to transfer the share from one partner to an antitheticwise(prenominal) person without the consent of existing partners. So the investment in the partnership remains confined into a couple of(prenominal) hands.10.PositionOne partner is an agent as well as principal to other partner. He outhouse bind the other person by his act. In the position of an agent he can make contract with another person or parties on behalf of his concerned trusty.11.Mutual ConfidenceThe business of the partnership cannot be conducted fortunately without the element of mutual confidence and cooperation of partners. So the members must have trust and confidence in each other.1 2.Free OperationThere are no strict rules and regulations to control the partnership activities in our country i.e. no restriction for the audit of accounts, submission of various reports and other copies to any government authority. So this arranging may operate freely without any interference.Q-2Explain the advantages and disadvantages of Partnership?Ans.The main advantages and disadvantages can be explained as a) Advantages of PartnershipPartnership is preferred to other forms of business delinquent to the following advantageous points.1.Ease of OrganizationPartnership can be organized without any legal formalities. There is no license salary, registration fee, registration fee for the formation of this type of organization. No formal documents are required to be submitted to the Registrars Office. ii or more persons may start this type of business at any time. But the formation of the colligation Stock Company is needed long complicated process.2.Sufficient CapitalIn the so le proprietary the capital remains limited but this problem does not arise in the partnership loyal due to number of partners i.e. 20 in ordinary business and 10 banking business. As such partner contributes his share in the business so capital volume can be sufficiently change magnitude for business activities.3.Borrowing FacilitiesThe partnership firm is considered safe organization for providing credit facilities due to unlimited liability of partners. thus sufficient funds in terms of credit can be procured from financial institutions or other sources in time of need.4.Simplicity in DissolutionThere are no complicated legal requirements for the dissolution of the partnership firm. Partners may dissolve their business very easily at any time. On the other side, Joint Stock Company cannot be dissolved without fulfillment of the long process of the company order 1984.5.Combined AbilitiesA firm may enjoy the combined abilities of several heads. There may be different abilities of partners i.e. purchaser, administrator, accountant and Technician. So the firm is in a position to utilize their services for product1ve purposes.6.Skilled WorkersAs the firm enjoys larger financial sources therefore, it is possible for the organization to hire the services of qualified and competent persons for indefinite catamenia of time. consequently capital and financial sources of firm may be utilized maximum in useful sector.7.Minority ProtectionMinority protection in a partnership cannot be neglected by law. each(prenominal) the policy matters are decided with the consent of each partner. If any matter is disposed of without the willingness of one partner, the dis-agreement partner may withdraw his share and may dissolve the firm. Thus there is no risk of any conspiracy against the minority partners on behalf of the majority partners.8.Personal InterestThe partnership firm is in a get around position in respect of personal element as compared with Joint Stock Company . As number of members in ordinary business cannot exceed 20, so all the benefit is confined among these partners. This factor creates the powerful motivation to efficiency, economy, production and strong financial position.9.Minimum Legal RestrictionsThis form of organization is fee from following restrictions(a)Declaration of Profit.(b)Submission of the composition to the Registrars office.(c)To audit the annual accounts.(d)To call the meeting.(e)To dispose of the Resolution.(f)To maintain the statutory books.(g)To publish current statements.On the other hand, public company has to follow strictly the above mentioned restrictions by law. But partnership may operate freely without interference from any legal authority.10.Public TrustPeople show more confidence on partnership firm than sole tradership. If firm is registered they think .these are working beneath the supervision of the government. So people feel no risk in creating relation with such business. Thus goodwill is est ablished in the market which increases the income earning capacity of the firm.11.Expansion of BusinessThere are more chances to round the business volume due to the following factors(a)Large number of partners.(b)Combine judgment and abilities.(c)Personal interest of each partner.(d)Fore-sight element due to unlimited liability.(e)Administrative and technical abilities.(f)Borrowing facilities.But some important factor are not found in sole tradership. So its business cannot be expanded comparatively.12.Flexible ManagementThis organization is considered flexible as compared with Joint Stock Company. Partners can change their business policy with mutual consultation. They thus make immediate decision, since there is no necessity of disposing of resolution. The quickness of action is the most important element in the field of management as well as in marketing.13.SecrecyAs there is no compulsion to publish its accounts for partnership firm so the business secrecy remains confined wit hin the partners. This sector is important for successful operation of the business. But Public Company has to publish all types of accounts by law.14.Moral PromotionPartnership is the shell organization for small investors and to show themselves the proprietors of the firm. This factor promotes the moral courage of partners.