For a Partnership firm to cease to exist it needs to be dissolved the process known as dissolution of a partnership firm involves the sale of disposal of all assets of the firm final settlement of all of its liabilities and the settling of the accounts.
For a Partnership firm to cease to exist it needs to be dissolved the process known as dissolution of a partnership firm involves the sale of disposal of all assets of the firm final settlement of all of its liabilities and the settling of the accounts How to Dissolve a Partnership Firm? Dissolving a partnership firm means discontinuing the business under the name of said partnership Firm. In this case, all liabilities are finally settled by selling off assets of transferring them to a particular partner, settling all accounts existed with the partnership firm. Any profit/ loss is transferred to partners in their profit sharing ratio as agreed by them in the partnership deed. Dissolving a partnership firm is different from dissolving a partnership in the former case, the firm Ends its name and hence cannot do business in the future. But in case of dissolving a partnership the existing partnership is dissolved-by consent or on happening of a certain event but the firm can retain its existence if remaining partners enter into– a new partnership agreement. There are different ways in which a partnership firm may get dissolved-–
When partners are mutually agreed?
It is the easiest way to dissolve a partnership firm since all partners have mutually agreed upon Closing the partnership firm. Partners can give a mutual consent or may enter into an agreement for the dissolve. Are a partnership firm Compulsory dissolution? A firm may need to be dissolved compulsory if: 1 All Partners or all Partners except one partner are declared insolvent 2 The firm is carrying unlawful activities like dealing in drugs or other illegal products or doing Business with alien countries or other countries that may harm the interest of India of doing other such activities. Dissolution depending on certain contingent events Upon happening of certain events, a firm may be required to get dissolved 1. Expiry of fixed-term-Partnership formed for a fixed term will get dissolved once the term gets over. 2. Completion of task-Sometimes, a partnership is formed for a certain task or objective. Once the task is completed the partnership will automatically get dissolved. 3. Death of the partner– If there are only two partners, and one of the partner dies, the partnership firm will automatically dissolve. If there are more than two partners, other partners may continue to run the firm. In such case, only the partnership will get dissolved, and other partners will enter into a new agreement.
What is Dissolution by notice?
If a partnership business is at will, any partner can dissolve the partnership by giving an advanced notice. Notice will contain a date from which dissolution will be effective.
Drafting of dissolution deed
Approval from the partners
Filling of ITR (If not filed earlier)
Pan card surrender
Submission of application to Income tax department