What Is the Role of a Partnership Deed in Accounting?

A partnership deed, or partnership agreement, is created when a partnership business is formed. It is a legal document detailing terms of the agreement, duties, obligations and rights of partners.

Purpose

The partnership deed states partners' ownership rights to the business as well as each partner's obligations to the business. This agreement helps avoid misunderstandings between members.

Details

Each partner's name is listed on the deed as well as the business name and type of business. It contains all terms of the agreement including dispute settlement clauses and terms for dissolving the partnership. This deed also states the duration of the partnership as well as the rights and duties of each member. The partnership agreement is dated, signed and notarized.

Financial Information

This deed states the amount of equity each invested by each partner. It also breaks down the way profits and losses will be allocated, which is usually done as percentages based on ownership rights. It explains each partner's pay, compensation and benefits.

References

• TN Reginet: Partnership Deed
• Legal Explanations: Partnership
• Future Accountant: Indian Partnership Act, 1932