What is partnership deed
When two or more people want to start a new business & to share the profits & losses they come together to form a partnership such written agreement is known as 'Partnership Deed'. One can also call it is a 'Partnership Agreement'.
Following are the major benefits of having a well-drafted Deed:
· It regulates the rights, duties, and liabilities of each partner.
· It helps to avoid any misunderstanding between the partners because all the terms and conditions of the partnership have been laid down beforehand in the deed.
· Any dispute between the partners may be settled easily as the partnership deed may be readily referred to.
· It clears confusion as to what should be the profit and loss sharing ratio between partners.
· It clearly mentions who does what. Individual partner’s roles can be defined.
· Partnership deed can also contain clauses which clarifies what should be remuneration (salary) to partners. Usually, remuneration is paid to working partners. However, interest payment is done to all partners who have brought in capital in the business.