A partnership deed is a written agreement between the partners of a partnership firm that outlines the terms and conditions of the partnership between the partners. It is a legal document that two or more partners must sign if they wish to operate a business together to generate profits. The purpose of a partnership deed is to provide a clear understanding of the roles of each partner, which ensures smooth running of the operations of the firm. The contents of a partnership deed include:
- The name of the firm
- Name and addresses of the partners
- Nature of the business
- The term or duration of the partnership
- The amount of capital to be contributed by each partner
- Profit sharing ratio
- Salaries and commission of partners
- Rights and responsibilities of each member.
It is important to note that a partnership deed can be oral or written; however, an oral agreement is of no use when the firm has to deal with tax.
