Lack of a Written Partnership Deed
One of the most frequent and risky mistakes is starting a partnership without a formal written agreement.

• Leads to confusion about profit sharing, roles, and authority
  
• Makes it hard to resolve disputes legally
  
• Default rules under the Indian Partnership Act may apply unintentionally
  
• No clarity on capital contribution or withdrawal procedures
  
• Courts find it harder to enforce verbal agreements
  

Unclear Profit and Loss Sharing Arrangements
Partners often fail to properly define how profits and losses will be divided.

• Equal sharing applies by default if not specified, regardless of contribution
  
• May cause disputes if one partner invests more but gets equal returns
  
• Lack of clarity on reinvestment vs. personal withdrawal
  
• No provision for compensation to working partners
  
• Can create tax and accounting inconsistencies
  

No Defined Roles and Responsibilities
Without specifying each partner’s duties and powers, operational issues quickly arise.

• Partners may overstep or underperform due to undefined boundaries
  
• Leads to duplication of effort or important tasks being ignored
  
• No accountability for day-to-day decisions or strategic choices
  
• Disputes arise over business control and authority
  
• New hires or team members get confused about the reporting structure
  

Failure to Register the Partnership Firm
Though not mandatory, non-registration limits legal rights and protections.

• Unregistered firms cannot sue third parties or even other partners
  
• Partners lose enforceability of rights in court
  
• May face difficulties opening bank accounts or applying for tenders
  
• Reduced credibility with clients, investors, and government departments
  
• Misses out on formal recognition and statutory benefits
  

Ignoring Exit, Retirement, or Dispute Clauses
Many partnerships are formed in goodwill but lack planning for breakdowns.

• No defined process for partner resignation, retirement, or expulsion
  
• Disputes cannot be resolved without court intervention
  
• No clarity on the division of assets if the firm dissolves
  
• A partner’s death or insolvency creates legal complications
  
• Surviving partners face confusion in succession or business continuity