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Partnership form of organisation is suitable for medium size business where personal efforts of entrepreneurs are essential. The following are the advantages of partnership:

The formation of partnership requires an understanding among the partners in the form of an agreement because partnership arises not from status but from contract.

Under-capitalization refers to a state of insufficiency of capital. The state of under capitalization emerge from under-estimate of capital needs of the promoter and failure to provide necessary current finance by borrowings.

Over-capitalization refers to a state where the amount of shares issued by the company is more than the required amount.

Debenture is a written document bearing the seal of the company and which acknowledges a debt.

Giving recognition to the company in the eye of the law is termed as incorporation. A joint stock company enjoys the status of legal entity when it is incorporated.

An ideal partnership is a name given to a successful business. A partnership will be successful when there is proper understanding among partners.

Following are the essential characteristics of a partnership firm:

A partnership is an association of two or more persons to carry on, as co-owners, a business and to share its profits and losses.

Partnership becomes illegal in the following circumstances:

The word implied authority denotes the authority to bind the firm which arises by implication of law from the fact of partnership.

The procedure of registration of partnership firm is very simple. A partnership firm can be registered at any time by filling a form containing the following particulars.

The word unlimited liability denotes no limitation to the liability. Unlimited liability is advantage to partnership firm because of the following reasons:

In the absence of partnership deed the following rules regarding rights and duties are followed.