Sometimes, it becomes difficult to run the partnership business due to lack of sufficient capital or managerial help or both. In this case a firm may decide to admit a new partner into the firm. But according to Indian Partnership Act 1932, no partner can be admitted into the firm without the consent of all the existing partneTk A person who is admitted, as a partner into the firm does not thereby becomes liable for any act of the firm, done before his admission. A partner is admitted for any one or more of the following reasons:
In order to acquire
more capital for the business.
In order to have more managerial skill, a competent and
experienced person is needed.
In order to expand and boost up the business.
In order to increase the goodwill by admitting a well-reputed
person into the business.
In order to reduce the competition.
Sharing in the assets of the firm: - In order to acquire the right of becoming the owner of a part of assets of the firm, new partner has to contribute towards the amount of capital into the business.
Sharing in the
future profits or losses of the firm: - In order to have right to share in
profit in future new partner has to pay for the amount of goodwill into the
business.