ANSWERS: 1
  • A Partnership Deed is a binding legal agreement between the individual parties which form a business partnership. Very similar in structure and nature to a Partnership Agreement, the Partnership Deed clearly outlines the shareholders, individual responsibilities, ownership percentages, and profit and loss distribution.

    Fiduciary Responsibility

    Each partner must clearly understand the monetary responsibility that he holds with regard to the other members of the partnership. These responsibilities must be detailed in the Partnership Deed to avoid any potential confusion.

    Funding

    One of the most crucial questions to be answered in the initial startup phase of any partnership is how will the new business be capitalized. This information is generally clearly defined within the parameters of the Partnership Deed. Likewise, provisions should be made to include the contingency of raising additional capital if necessary.

    Accounting Procedures

    An overview of general accounting practices must be covered. These practices include dates for the fiscal year, where and who will keep the records, and when reports will be filed with each of the partners.

    Profit and Loss Distribution

    The Partnership Deed will identify all members of the partnership and will specifically state the percentage of ownership. Furthermore, the deed will annotate the percentage of liability and profit share related to each member.

    Salaries

    The initial annual salary is stated along with additional bonuses or guaranteed payments to the partners.

    Termination

    Many factors play into the termination of a partnership. Special care should be made to include any possible foreseen reason for termination including retirement or death by a member, dissolution of business, and withdrawal of a member from the entity. Information needs to be provided as to the distribution of profits or liabilities as well as how shares will be reabsorbed into the company.

    Source:

    Halborg and Company

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