A partnership firm can be formed either with oral or written agreement. However, in most of the cases written agreement i.e. partnership deed is feasible as well preferred.
The primary reason behind the execution of partnership deed is to put all the clauses in writing an well-thought, especially for the situations like addition or removal of a partner or capital contribution, profit-sharing ratio and dispute resolutions or winding-up. We may not foresee any situation of disputes at present, however having these clause and facts in writing will certainly help you in future. In case of disputes, many deny existence of partnership or may mislead for any other clauses. Therefore, having a written deed with their assent accorded in form of signature is admissible.
Further, for starting a business as partnership and for capital contribution, stamp duty amount is payable to concerned State Government, which requires the execution of partnership deed and noting of all facts to formation of partnership deed. Moreover, without presenting a partnership deed, the partners may not get the bank account in name of partnership.
Additionally, not only a partnership deed but the registered partnership firm has its many benefits. Unless a firm is registered with Registrar of firm, the firm does not have ability to sue a third party or the partners inter-se.
If you have any queries for formation of partnership firm, get it resolved by experts.