Basics of Accounting for Partnership

2. PARTNERSHIPDEED/ARTICLES OF PARTNERSHIP
 A Documents containing terms and conditions of
partnership.
 The partnership agreement may be oral or in writing
 A partnership deed, also called a partnership
agreement, is a legal document used in a business
partnership formation. It includes the details
pertaining to the duties, liabilities, and mutual rights
of the partners.

3.  Partnership deed is drawn to avoid misunderstanding and
undesirable litigation.
 There is no prescribed Performa for partnership deed but it must
be stamped and signed by all the partners.
It is decided to have a partnership deed in written form, it should
be stamped according to the provisions of Stamp Act, 1899.
 It is not regarded as a public document like memorandum of
association and articles of association. It is otherwise known as
agreement, deed or articles of partnership.

4. PARTNERSHIP DEED

5. CONTENTS OF A PARTNERSHIP DEED
1. Name of the firm and Its Address :
The deed should contain name of the firm and place of it business.
2. Name and Address of Partners :
The deed should also contains the names and address of all partners.
3. Nature of Firm’s Business :
The nature of business proposed to be carried and its limitation
should be included in it.
4. Duration of Partnership :
It the partnership is established for a fixed duration or for a fixed
work, it should be stated in it.

6. 5. Partners’ Capital :
The deed should contain the total amount of capital and
contributions by each partner.
6. Interest on Capital :
If the partners decide to change interest on their
capitals, the rate should be mentioned in the deed.
7. Drawing and Interest on Them :
The deed should contain the limit of drawings by every
partner and the rate of interest to be charged.

7. 8. Division of Profit :
Profit and loss sharing ratio should be stated in the deed. If it is
not mentioned partners are authorized to share equally according to
Partnership Act.
9. Partners’ Salary and Commission :
The deed should contain the amount of salary or commission
payable to any partner for the services rendered to the business.
10. Rights and Duties of Partners :
If any partner has some special rights and duties regarding to
conducts of business or if the liability of any partner is limited to
the capital invested by him, these facts should also be mentioned in
it.
11. Admission and Retirement of Partners :
After the establishment of partnership some new partners may be
admitted and some may retire from the business.

8. 12. Death of a Partner :
The procedure of calculating the amount due to a deceased partner
and the method of its payment to his successors, should also be
decided and stated in the deed.
13. Valuation of Goodwill :
The method of valuation of goodwill at the time of admission,
retirement or death of a partner should be also be clearly stated in it.
15. Revaluation of Assets and Liabilities :
The method of revaluation of assets and liabilities on admission,
retirement or death of a partner should also be clearly stated in it.

9. 15. Accounts and Audit :
The procedure of keeping accounts and their audit should also be
stated in it.
16. Dissolution of Partnership :
The deed should contain the firm and the method of the final
settlement of accounts.
17.Any other important matters

10. • All partners are entitled to share equally in the capital and profits of the
firm and must contribute equally towards losses.
• If any of the partners has advanced any amount in addition to his share of
capital, he is entitled to interest at rate of 6%.
• Every partner is entitled to take part in management of the partnership
business and no partner can claim any remuneration for his participation
in management.
• No partner can be admitted as a partner nor can any existing partner be
expelled without the consent of all partners.
• Any difference of opinion arising as to the ordinary matters relating to the
partnership business may be decided upon by majority of the partners.
PROVISIONS OF DEED ACCORDING TO SECTION
13 OF INDIAN PARTNRSHIP ACT 1932

11. • The name under the which partnership business is
carried on is the ‘firm name’.
• It should not be similar to another firm doing similar
business.
• The name of the firm may or may not include
‘partners’ name
THE FIRM NAME

12. Even the best of friends
or close family friends
should create and sign a
business partnership
agreement to avoid
miscommunications and
legal problems that can
arise even when there’s
no disagreement.
IMPORTANCE OF PARTNERSHIP
DEED

13. Avoid Conflict
Ownership
Control
Liability
Dissolutions
Introducing new partners and removing
partners
IMPORTANCE OF PARTNERSHIP DEED