Partnership

Types of Partners:

Types of Partners

Types of Partners

Types of Partners

1. Based on the extent of participation:

  • Active partners / Working partners: Partners who actively participate in the day-to-day operations of the business.

  • Sleeping / dormant partners: Partners who do not participate in the day-to-day activities of the business.

2. Based on sharing of profits:

  • Partners may be classified as ‘Nominal Partners’ and ‘Partners in Profits’.

  • Nominal partners allow the firm to use their name as partner.

  • They are liable to third parties for all the acts of the firm.

3. Based on Liability:

  • Partners can be classified as ‘Limited Partners’ and ‘General Partners’.

  • Liability of limited partners is limited to the extent of their capital contribution.

  • Partners having unlimited liabilities are called as general partners.

4. Based on the behaviour and conduct exhibited:

  • It includes:

    • Partner by Estoppel: Person who behaves in the public in such a way as to give an impression that he/she is a partner of the firm

    • Partner by Holding out: If a partner or partnership firm declares that a particular person is a partner of their firm, and such a person does not disclaim it. He/she called Partner by Holding out.

Formation of partnership form

  • Minimum two members required.

  • Agreement among the partners to carry on the business and share the profits and losses.

  • Agreement signed by all the partners. It includes:

    Agreement signed by all the partners

    Agreement Signed by All the Partners

    Agreement signed by all the partners

  • Partners should get their firm registered with the Registrar of Firms of the concerned state.

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