Assignment 10

 What is the nature of partnership?




A partnership is a form of business organization which is defined in the U.K.partnership Act of 1890 as "the relation which subsists between persons carrying on a business in common with a view to profit".
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 What are the advantages of partnership form of association?



1. A partnership provide a simple and convenient form of association particularly for those with limited resources and skills who desire to set up a business

2. It also affords an opportunity to a sole proprietor to expand and upgrade his activities by bringing in fresh capital and experienced management.

3. The partnership form is adopted by some professionals who practice jointly, especially since some of them cannot incorporate.



 What are the main characteristics of "Working Partner"?



1. A working partner is not considered a partner for tax purposes and is not treated as such. Generally such a person gets fixed share of the profits though he may or may not draw a salary. He is however not involved in losses.

2. The working partner's share of profits is treated as a salary and allowed as a business expense.

3. The working partner's share of profit and his salary paid if any, is the share of profit before adjustment for tax.