Partnership Deed

 Partnership deed is an agreement between the partners of a firm that outlines the terms and  conditions of partnership among the partners. A partnership firm is one of the popular types of  organizations for starting a new business. The smooth and successful running of a partnership  firm requires clear understanding among its partners regarding the various policies governing  their partnership. The partnership deed serves this purpose. It specifies the various terms such  as profit/loss sharing, salary, interest on capital, drawings, admission of a new partner, etc. in  order to bring clarity to the partners.

Though issuing a partnership deed is not mandatory, but it’s always better to enter into a  partnership deed to avoid any possible disputes and litigation among the partners. The  agreement can be made between two or more partners. It must be stamped and signed by all  the partners.

The partnership deed contains the following details:

i) Business of the firm: Business to be undertaken by the partners of the firm

ii) Duration of Partnership: Whether the duration of the partnership firm, is for limited period or  for a specific project

iii) Sharing of profit/loss: Ratio of sharing profits & losses of firm among partners

iv) Salary and commission: Details of the salary, and commission if any, payable to partners

v) Capital contribution: Capital contribution to be made by each partner and the interest on said  capital to be paid to partners

vi) Partner’s Drawings: Policy regarding the drawings from the firm allowed to each partner and  interest if any to be paid by partner, to firm on such drawings

vii) Partner’s Loan

viii) Duties & Obligations of partners

ix) Admission, Death & Retirement of partner

x) Accounts & Audit

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