1. What is a partnership firm?

Ans. A partnership firm is a type of business organization where two or more individuals come together to carry on a business with a common goal of making profits. In a partnership firm, the partners share the responsibility, profits, losses, and decision-making.

2. What are the advantages of a partnership firm?

Ans. There are several advantages of a partnership firm. Firstly, it allows for the pooling of resources and expertise of multiple partners, which can lead to better decision-making and business growth. Secondly, the liability is shared among the partners, reducing individual risk. Additionally, partnership firms enjoy greater operational flexibility and can benefit from tax advantages.

3. How is a partnership firm registered?

Ans. To register a partnership firm, the partners need to draft a partnership deed, which includes details such as the name of the firm, names and addresses of partners, profit-sharing ratio, capital contribution, and duration of the partnership. Once the partnership deed is prepared, it needs to be signed by all partners and registered with the Registrar of Firms.

4. What are the types of partnership firms?

Ans. There are three types of partnership firms: general partnership, limited partnership, and limited liability partnership (LLP). In a general partnership, all partners have unlimited liability. In a limited partnership, there are both general partners with unlimited liability and limited partners with limited liability. An LLP is a separate legal entity where partners have limited liability.

5. How are profits and losses divided in a partnership firm?

Ans. The division of profits and losses in a partnership firm is based on the terms specified in the partnership deed. Typically, profits and losses are divided among partners in proportion to their capital contribution or as agreed upon in the partnership agreement. However, partners can also agree on a different profit-sharing ratio based on their individual contributions or efforts.

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