A Partnership Firm: What Is It?
One particular legal entity created by more than one individual when they formally contract for their business is a partnership firm. This document, known as a partnership deed, outlines the team’s proposed company operations. The parties involved also agree on how they would split any assets and liabilities their company experiences. Small businesses use this company model because the application process for partnerships is easy and uncomplicated. Also, partnership firms simply need to comply with a limited number of regulations, which makes them simple to run and keep up.
Types of Partners:
Real or Present Partner:
Any individual who proactively contributes in the management of the firm and has been made a partner by a contract. Such partners shall, upon retirement, release themselves from all obligations and liabilities simply providing notification to the public.
Inactive Partner:
Any participant who, through a contract, has been made a partner but who is not heavily involved in managing the business. These partners do partake in the firm’s earnings and liabilities, but they are not required to give legal disclosure when they resign.
Principal Partner:
Any member who, despite having no involvement in managing the company, only provides their name to it. They have not made any investments and do not participate in the company’s revenues or liabilities.
Associated in Revenue:
Any participant who receives a portion of the company’s profits without being responsible for its liabilities. These participants are exclusively accountable for the profits they obtained from the company.
Sub-Partner:
These associates are not responsible for the firm’s decisions.
Visiting Parties:
Any partner accepted into an established firm who is not accountable for actions committed prior to their entry.
Former Partners:
any partner parting ways with the company while the other partners keep running the business. Such partners are responsible for their actions until they give notice of them to the public.
Partner by Holding Out:
A person who offers themselves out as a partner or makes that representation but is later barred from doing so. Any person who provided the firm credit as a result of these partners’ representations owes them money.
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