What is Partnership Deed?

A partnership deed is also called a partnership agreement between the partners of the firm which outlines the terms and conditions of the partnership between the partners. The purpose of a partnership deed is to provide a clear understanding of the roles of each partner, which ensures the smooth running of the operations of the firm.

Partnership-deed

Registration of Partnership Deed

All the rights and responsibilities of each member are documented in a document known as Partnership Deed. This deed can be oral or written, however, an oral agreement is of no use when the firm has to deal with the tax.

  • The name of the firm.
  • Name and addresses of the partners.
  • Nature of the business.
  • The term or duration of the partnership.
  • The amount of capital to be contributed by each partner.
  • The drawings can be made by each partner.
  • The interest to be allowed on capital and charged on drawings.
  • Rights of partners.
  • Duties of partners.
  • Remuneration to partners.
  • The method used for calculating goodwill.
  • Profit and loss sharing ratio.

Partnership Deed Contents

While making a partnership deed, all the provisions and the legal points of the partnership deed are included. This deed also includes basic guidelines for future projects and can be used as evidence at times of conflict or legal procedures. For a general partnership deed, the below-mentioned information should be included.

  • Name of the firm as determined by all partners.
  • Name and details of all the partners of the firm.
  • The date on which business commenced.
  • Firm’s existence duration.
  • Amount of capital contributed by each partner.
  • The profit-sharing ratio between the partners.
  • Duties, obligations, and power of each partner of the firm.
  • The salary and commission if applicable that is payable to partners.
  • The process of admission or retirement of a partner.
  • The method used for calculating goodwill.
  • The procedure that must be followed in cases of dispute arising between partners.
  • Procedure for cases where a partner becomes insolvent.
  • Procedure for settlement of accounts in the event of dissolution of a firm.

Importance of Deed

  • It controls and monitors the rights, responsibilities, and liabilities of all the partners.
  • Avoids dispute between the partners.
  • Avoids confusion on profit and loss distribution ratio among the partners.
  • Mentioned partner’s responsibilities as clearly.
  • It also defines the remuneration or salary of the partners and working partners.

Partnership Deed Format in Word

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