To start with Partnership in India, minimum two persons shall come together to carry on certain activities with the object of earning Profit. Here, a Partnership Firm cannot be formed with charitable object. Further, the Partners shall enter into agreement named Partnership Deed, whether registered or unregistered.
A Partnership Firm, under Indian Partnership Act, 1932, is classified under two main heads being Unregistered and Registered Partnership Firm. Both types of firm are legal and valid to carry on the business under the Act.
A Partnership Firm can be started with any amount of capital contribution by the Partners as there is no minimum requirement prescribed in this regard. The Partners can contribute in any amount agreed and in any form being tangible (cash, premise) or intangible (goodwill, intellectual property). The Partners can introduce capital in any ratio, equal or uneven.
Minimum 2 Partner are required to form a Partnership Firm which shall not exceed 50 number of partners.
The PAN and TAN in the name of Partnership Firm can be applied either after entering into Agreement or after registration of Partnership frim with respected RoF. The physical copy of the PAN will be received at the Business Place only after being dispatched by the Income Tax Department.
The registration of Partnership Firm in India can take 12 to 14 working days. However, the issuance of Registration Certificate can take place as per the regulations of concerned state. The time period for registration of Partnership Firm is subject to Government processing time.
The Partnership Firm shall maintain the Books of Accounts and Financial Statement. The Income Tax Return shall be filed for the respective financial year before the due date as per Income Tax Act.
Partnership firms do not need to prepare audited statements for each year. However depending on the turnover and a few other criteria, a tax audit statement might be necessary.
Alike every other entity, there are certain criteria laid down for mandatory registration under GST. Following are few general criteria for mandatory registration: An aggregate turnover exceeding Rs. 20 lakh in a financial year mandates registration for a dealer or service provider under this law. However, for dealers conducting business in north-eastern states of India, an aggregate turnover exceeding Rs. 10 lakh mandates a registration. Any online platform operator. Partnership Firm engaged in inter-state supply of Goods or Services.
A partnership firm can be converted to a Private Limited Company or a LLP considering its requirements. However, the procedures to convert a Partnership firm into a Company or LLP are cumbersome, expensive and time-consuming. Thus, it is wise for many entrepreneurs to consider and start a LLP or Company instead of a Partnership firm.