Question

Does partnership firm has a separate legal entity? Give reason in support of your answer.

Answer 1

Unlike Companies, partnership firm does not have separate legal entity. A partnership is formed by two or more person who decides to carry on some business and share the profits in some agreed ratio.

The partners are the contributors of capital and their is no common seal of a partnership firm. The partners signature represents the firm. The liabilities of the partners are limited to the capital contributed by them and if there is insolvency then the private properties of the partners are also liable. If the partners of the firm become insolvent, then automatically the firm becomes insolvent too.