After the industrial revolution, modern business had been extended to the large-scale business with huge capital. And then businessman started to join their hand to run to business by sharing the investment and profits. Sole trading concern has numerous draw back limitations. To overcome such drawback businessmen start the partnership firms.
Single man cannot invest and contribute effectively in a business. So, people started to operate the business through their joint efforts this concept of business is known as a partnership business organization. Under partnership, they contribute capital, distributes profit and loss, manage and control the operation, and take the decision jointly for betterment of business. Hence , partnership an agreement between two or more persons to carry the business for their mutual benefits. The agreement of partners is called partnership deed. Persons who have entered into the partnership are individually called partners and collectively known as partnership firm.
In Nepal, it should be registered under the partnership act, 2020 B.S. (1963ad) section 5 of Act instructs that the firm must be registered within six months from the date of commencement with the concerned department of government of Nepal. The transactions prior to the registration won't be considered as a legal transaction of firm.
The definitions of partnership given by different famous scholars are presented below
i) According to Nepal Partnership act 2020 B.S." partnership is any business registered in the book of government, which is carried by some persons to one name for sharing the profit with the agreements to participate …….. in the business"
ii) According to L.H. Haney," Partnership is the relation between persons competent to make contract, who agree to carry on a lawful business in common with a view to private gain."
iii) According to Kimball and Kimball," Partnership firm is a group of men who have joined capital or service for prosecution of some enterprise."
Character of partnership
a) Two or more person
b) Agreement
c) Searing profit/loss
d) Unlimited liabilities
e) No separate legal entity
f) No free transfer of share
g) Joint ownership and control
h) Duration of partnership
Advantage
a) Easy to establishes and dissolve
b) Adequacy of capital
c) Effect of management
d) Flexibility
e) Facility of loan
f) Prompt decisions
g) Sharing of risk
h) Business security
Disadvantage
a) Chance of miss understanding.
b) Limited capital
c) Unlimited liabilities
d) Uncertain future
e) Delay in decision
f) Lake of public faith
g) No transferability of sharing
