Admission of a partnership accounts

New partner can be admitted when the firm is in need of more capital or persons with better managerial skills or both.

Admission of a partner is one of the modes of reconstituting the firm because with the admission of a partner,existing agreement comes  to an end and new agreement among all the partners ( including incoming or new partner)comes into force.Capital contribution by the new partner ,his share of profits and other conditions are agreed upon.The new partner on joining becomes liable for the liabilities of the firm and entitled to have share in assets and liabilities of the firm and entitled to have share in assets and profits of the firm.

According to section 31 of the Indian Partnership Act,1932,a person can be admitted as a new partner:

i)if it is so agreed in the Partnership Deed, or

ii)in the absence of the above ,if all the partners agreed for the admission.

After admission ,the new partner gets following two rights:

1.Right to share future profits of the firm.

2.Right to share future in the assets of the firm.

At the same time ,he becomes liable for any liability of the business incurred after admission and any loss incurred by the firm.