The agreement signed between the partner which describes as well as outlines the terms and conditions of the partnership is known as the Partnership Deed. When a new business is being set up, then for them Partnership is one of the most popular forms of business registration. it is important that among all the partners of the partnership firm, there is a clear understanding of the policies which are governing the said partnership. The reason for this being that it helps in the smooth as well as successful running of the business. This acts as the main purpose of the Partnership Deed. There are various terms that needs clear understanding so that all the partners remain on same page, such as:

·         Profit and loss sharing,

·         Admissionof a new partner,

·         Intereston capital,

·         Removal of a partner,

·         Salary,

·         Drawings, etc.

Even though signing a Partnership Deed is not a mandatory procedure, however it is always recommended to draft and sing the partnership deed. The reason for this suggestion is to mainly avoid any sort of disputes or litigation matters that may arise in future among the partners of the firm. Such an agreement can be made among two or more partners. Although it is important that all the partners of the firm sign the deed as well as get it stamped.

The details that have to be mentioned in the Partnership Deed is as follows:

1.      The Business of the Firm: They have to mention what business operations are they planning on undertaking for their partnership firm.

2.      The Duration of the Partnership: They need to clearly mention the duration of their partnership. It could either be a specific period or last only for a specified project.

3.      The profit and loss sharing ratio: They need to mention the ratio that all the partners will be sharing while distributing both profit as well as loss between them.

4.      Salary and Commission: In case any salary or commission is to be paid to the partners it has to be specified in the Partnership Deed clearly.

5.      The Capital Contribution: The Partnership Deed will clearly mention the amount of capital which will be contributed by each of the partners. It will also include the details of the interest that will be paid to the partners for the said Capital.

6.      Each Partner’s drawings: In case the firm has a policy to allow the partners to draw funds from the Partnership Firm then it has to be mentioned in the Partnership Deed. They will also have to mention the amount of interest (if charged) on the said drawing by the partners that they will have to pay to the firm.

7.      Partner’s Loan

8.      Duties and Obligations of each Partner

9.      Death, Admission as well as Retirement of the partners

10.  Accounts and Audit