Sole proprietorships are businesses that are owned and operated by a single business owner.
2) the 2 persons running separate businesses can form partnership firm
3) deed of partnership can be entered into by the 2 persons
Partnership between two proprietor business
In India if 2 persons have seperate sole proprietorship businesses ,can they form a partnership between 2 proprietorship business with certain agreements with a goal to have different liability and profitability but to ensure dependency between two business as the two business can be integrated. If it's not then is there any way to achieve similar goal?
Asked 7 years ago in Business Law
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6 Answers
Thank you sir for your kind advice. In regard of the second point you have mentioned, "the 2 persons running separate businesses can form partnership firm", does that mean formation of partnership firm between two businesses or formation of partnership between two persons who are running the business? What is the legal procedures for this? Thanks in advance.
Asked 7 years ago
It means formation of partnership firm between 2 persons running their separate business
2) deed of partnership has to be drafted
3) partnership firm should be duly registered
In sole proprietorship, only one person manages and controls the business. But due to a number of disadvantages in this form of business, it gave birth to Partnership, where the number of owners has been increased to 2 or more. Here, the partners share the profits and losses, in the agreed ratio.
A partnership comes into existence by agreement between the persons who want to share the profit of the business. Such an agreement may be implied by the conduct of the partners or may be express (Oral or written).It also describes the rights and duties of each partner joining partnership business.
A memorandum of understanding (MOU) is a nonbinding agreement between two or more parties outlining the terms and details of an understanding, including each parties' requirements and responsibilities.
So in separate sole proprietorship businesses concern a memorandum of understanding is good .
Coming directly to your second question as you have already got answer for the first,
This one is based on the sound legal precedence and principle. The legal procedure for this is to put the name of two partners when the firm is being registered with the Government.
Either both the firm's may enter into a joint venture to run the business with common goal on a properly drafted agreement or by opening a new partnership firm.
The contract agreement need to be vetted by an expert before finalizing the same.
Two individuals can start a partnership firm and not two firms