Dissolution of partnership vs. Dissolution of firm.
Dissolution of partnership and Dissolution of firm are two different terms. Dissolution of partnership means termination of existing partnership agreement and the formation of a new aggreement which can be due to any reason like admission of a new partner or death or retirement of an old partner. In the case of dissolution of partnership the remaining partners may agree to carry on the business under a new agreement. Whereas Dissolution of Partnership firm means that the firm is closing down its business. In the case of dissolution of firm the Assets of the business are sold, Liabilities are paid off and the accounts of the partners are settled out of the remaining amount.
Dissolution of partnership
Partnership is dissolved in the following circumstances:
1) At the time of admission of a new partner;
2) On the retirement/death of an old partner;
3) At the time of change in profit sharing ratio among existing partners;
4) If any partner is declared insolvent;
5) On the expulsion of any partner;
6) On the expiry of the pariod of partnership.
Thus this is clear from the above discussion that in the case of dissolution of the partnership the firm may continue under a new agreement whereas in the case of dissolution of partnership firm the business of the firm comes to an end.