According to the Indian Partnership Firm 1932, when more than one person does any business together, taking both their profits and losses in their share, this type of business is kept under a Partnership Firm.
Talking about partnership firms, there are three types of firms. general partnership, limited partnership, and joint venture partnership
In a partnership firm, the agreement is signed in which all the terms and conditions are included, but there are many reasons which are ignored, due to which many firms break before reaching the heights and are not able to get success.
Through this article, we have told some such reasons why many firms break.
1. Money Management
Money Management While making partners, it is essential that there should be trust between both partners because to take forward any small to big business, the expectations also increase with the responsibilities, so there should be trust between both partners. Only then there is a chance to grow the business.
2. Unlimited Liabilities In Partnership
The biggest challenge in any partnership firm is having unlimited liabilities.
If certain obligations are not kept in the partnership, their work is not divided according to their experience and interest, then there is also the fear of the partner taking advantage of his power and responsibilities unfairly.
3. Confliction
The lack of ideas, tests, and temperament of the two partners is also a big reason for the breakdown of the partnership. Sometimes, due to non-approval of a partner’s decision, there can be a compromise towards the business and the company has to bear the loss.
4. Deed of Partnership Unwritten
It is very important to have written documents before starting any business, whether the business is small or big. Keeping all the legal documents in mind for the future, it is not right to trust any partner blindly.
There can be ups and downs in business at any time, in such a situation. It is necessary to have written documents, in the absence of written documents, the obligations of the partners are not divided. If there is no document in the instrument, then any partner can claim your rights to the business.
And if there is a loss in the business, then any partner can assert his responsibility,
Which does not have any valid reason, due to which the partnership of some big firms has been broken.
5. Not fixing roles in business
In many partnership firms, the roles of the partners are not decided, due to which there are no equal responsibilities. If one partner is doing hard work, and the other does not do any work, the business starts going down. Hence the partner Their work and roles should be fixed, as well as their monthly salary should be accordingly.
Do Not Ignore These Aspects Before Forming A Business Partnership Firm
In today’s time doing business in a partnership firm has become a common practice, any business requires experience, capital, and good contacts.
Let us tell you about some important aspects, with the help of which you can strengthen the partnership.
1. Choose the right partners for the business firm
Never include family members, friends, and relatives while making business partners. Because it will take you an emotional hacker decision in the business, you will have a trustworthy. Like-minded partner for business, who has the ability to grow your business.
2. The division of departments is also necessary
Be sure to divide some important departments in the business like Marketing, Client Services, and Accounting, Also make sure which member will handle which department.
3. Clear details of sales and purchases
Who will do the sales and purchase related to the business, keep the record of the business wholesale goods, how much mall is in stock or how much capital is invested in the market, about all this, every month or once a week, sit with all the partners and calculate and work? Maintain transparency in which the trust of the partners will remain.
4. Partnership deed is also required
Prepare the partnership deed with the help of a chartered account and legal expert. What legal procedures are necessary to be followed in the event of death, separation, or bankruptcy of the partner. For this, with the help of a better lawyer, the terms and conditions must be included in the partnership deed.
Great people say that if you want to go to great heights in the future, you must have a better team. A partnership firm is required to run such a business. Through this article, you must have known those aspects of the partnership due to which the firm breaks down, but if you have any questions then you can ask us through comments.
