Question

4.Who manages the business? Do all partners participate in day to day management or is management the responsibility of only certain partners?

5.If possible, learn how the partnership divides profits and losses among the partners.

6.How is the partnership taxed? How are the partners taxed on their share of partnership income or losses?

Answer 1

4)Manage a business successfully, manage a company, is the key to the establishment and growth of the business. The key to successful management is to examine the marketplace environment and create employment and profit opportunities that provide the potential growth and financial viability of the business

A general partnership is the most common type of partnership. It refers to a relationship in which all partners contribute to the day-to-day management of the business. Each partner will have the authority to make business decisions and even legally bind the company in contracts.

5) At the time before the registration of partnership. All the parents in the partnership firm are prepared a partnership deed in there all activities taken place in the patnership would be recorded and signed bay all partners. In that partnership deed was recorded there partners sharing ratios would be agreed by them

Sometimes change in profit sharing ratio taking place without any change in the number of patners(i,e. admission, retirement or death) of the firm.

When such changes take place,one or more partners purchase interest in the business form the other partners. Therefore the aggregate amount of gain by one or more partners is equal to the aggregate amount of sacrifice made by the other partners. The required adjustments in regard to the profit sharing ratio, revaluation of assets and liabilities, treatment of goodwill or reserves or partners capitals are same as what is done in case of admission or retirement or death of a partner.

The only exception is that neither a partner is coming into the business for a partner is going out. Sometimes a single entry is passed through partners capital accounts in gaining /sacrificing ratio, when such changes are not to be incorporated in the balance sheet, as is passed for adjustment of goodwill.

6)Partnerships themselves are not actually subject to Federal income tax. Instead, they — like sole proprietorships — are pass-through entities. While the partnership itself is not taxed on its income, each of the partners will be taxed upon his or her share of the income from the partnership.

Tax rate of partnership A partnership firm (including LLP) is taxable at 30%. Plus: Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.

Under section 10(2A) the partners share in the total income of the firm or LLP exempt from tax.