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BS 1 Chapter 4

The document discusses the concept of partnership in business, outlining its characteristics, types of partners, advantages, and disadvantages. It highlights the formation, management, and taxation aspects of partnerships, as well as the importance of a partnership deed. Additionally, it presents an assignment related to partnership business for students to reflect on their own business choices.

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shabir.ahmad1317
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7 views15 pages

BS 1 Chapter 4

The document discusses the concept of partnership in business, outlining its characteristics, types of partners, advantages, and disadvantages. It highlights the formation, management, and taxation aspects of partnerships, as well as the importance of a partnership deed. Additionally, it presents an assignment related to partnership business for students to reflect on their own business choices.

Uploaded by

shabir.ahmad1317
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Faculty of Computer

science
Business Study-I

Lecturer: Mr. Zakir Arman


(Silver Medalist)
Introduction to
Business

Chapter Four
• Partnership
• Characteristics of Partnership
• Advantages and disadvantages of Sole Proprietorship
• Partnership Deed/Agreement
Introduction to
Business
Partnership Business
Principles of
 A partnership is an associationMarketing
of two or more individuals who
agree to share the profits and loss of a lawful business.
Or
Whenever two or more than start a new business for the
purpose of generating money.
Introduction to
Business
Introduction to
Business
Characteristics of Partnership
Principles of
Marketing
 Formation: There must be at least two persons and maximum
twenty to form a partnership.
 Financing: The capital is made available to the firm by the
partners as per terms of the agreement.
 Management: Every partner has a right to take part in its
management. The important business decisions are taken with the
consent of all other partners.
Introduction to
Business
Characteristics of Partnership
Principles of
Marketing
Duration: The partnership operates at the pleasure of the partners. A
partnership can come to an end if a partner leaves, dies, bankrupt.
Taxation: If a firm is registered under the Income Tax Act, the profit of the
firm is first divided among the partners and then assessed separately. In case, it is
not registered the firm will be assessed on total profit as a single unit.
Introduction to
Business

Kinds of Partners
Principles of
Marketing
 Partners are broadly divided into three main categories.
1. General Partners
2. Special Partners
3. Other Partners
Introduction to
Business
General Partner
Principles of
Marketing
 Active Partner: A partner who takes active part
in day to day management of the business is called an
active partner.

Sleeping Partner: A partner who contributes


capital, shares profits and losses of the firm but takes
no part in management.
Introduction to
Business

Special partnersPrinciples of
Marketing
Special Partners are those, whose liability is limited to
the extent of their capital contributed in the firm.
Special partners can not take part in management of the
business.
Introduction to
Business
Other Partners Principles of
Secret Partner: A partner Marketing
who takes part in the management
of the business but is not known to the public.

Nominal Partner: A partner whose name is used by the


business, does not invest and does not take part in
management.

Minor Partner: A partner whose age is less than 18 and in


some countries less than 21.
Introduction to
Business
AdvantagesPrinciples
of Partnership
of
 Easy to Form: There are noMarketing
complicated legal formalities involved in the
establishment of partnership business.
 Favorable Credit Standing: The partnership enjoys a better credit rating in
the eyes of creditors. As the liability of each partner is unlimited, the financial
institutions can safely advance loans to the firms.
 Large Capital: Partnership can bring more capital to the business by the joint
efforts of the partners.
 Ease of Dissolution: The partnership can also be legally dissolved without
much difficult by mutual consent of the partners or in accordance with a contract by the
partners
Introduction to
Business
AdvantagesPrinciples
of Partnership
of
Marketing
 Sharing of Responsibility: There are many partners
involved in the operation of a business, so the firm can distribute the
duties and responsibilities to each other for which one is best
qualified and suited.
 Better Decision: There is an old saying “Two heads are better
than one.” In case of partnership the liability is unlimited so the
partners tend to be careful in taking business decisions.
Introduction to
Business
Disadvantages of Partnership
 Unlimited Liability: InPrinciples of
case of partnership the partners are personally and
Marketing
jointly responsible for all the debts of the firm.
 Limited Life: The duration of the partnership is always uncertain. If any partner
dies, injures, withdraws, or a new partner is entered into partnership so the partnership
may come to an end.
 Frozen Investment: It is very easy for a partner to invest money but it is most
difficult to withdraw the funds from the business. A person who wishes to withdraw
investment has to consult his partners, find a substitute with equal business ability.
 Slow Decision Making: In case of differences among the partners, a delay
may take place in decision making. This can cause loss to the firm.
Introduction to
Business
PartnershipPrinciples
Deed/Agreement
of
 It is also called articles of partnership.
Marketing
 Partnership agreement in writing is called partnership deed.
 Partnership deed is a document which is signed by all the partners
and which contains all the matters determining and governing the
mutual rights, duties and liabilities of the partners in the conduct
and management of the affairs of the partnership.
Introduction to
Business
AssignmentPrinciples
# 2 Marksof(3)
 Write about the partnership business
Marketing
In the previous assignment, would you like to change your form of
business to Partnership Business?
Who you will choose as your partner of your business?
Will your partner act as sleeping partner or active partner?

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