WHAT IS Partnership Firm?

 


Partnership, according to the Indian Partnership Act, 1932, is ‘the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all’. It is agreement between two or more persons who have decided to commence a business with an intention to make and share profits. The agreement can be oral or written and as per the partnership act the business is carried jointly by all partners o one partner acting for all. 

The objective of any partnership is to make and share profits. The maximum number of partners is 10 for a banking business and 20 for other businesses. For a partnership to be successful there should be an agreement to share both profits and losses. A partner doing a business should be understood by every other partner and each partner will be held responsible for every other partner’s act. The name under which the partnership business is carried is called firm name. No partner holds the right to sell the share of partnership to an outsider without the consent of other partners. 
Partnerships are of two types – registered and un-registered. Though the registration of a partnership is not mandatory, it is better to register for further advantages in future.

PROCESS OF REGISTRATION

 

Application Form

E-Mail Documents

Make Payment Online

Get Your Certificate

Why should I set up a partnership firm?

 


Minimal Compliance
General Partnerships do not need to appoint an auditor or, if unregistered, even file annual accounts with the registrar. Annual compliances are also fewer as compared to an LLP. General Partnerships do need to file Income Taxes and, depending on turnover, service and sales tax.

Easy to Start
It can be started with just an unregistered Partnership Deed in 2 to 4 days; registration, however, does bring a few advantages. It would enable you to file suits in court against another firm or partners in the firm for the enforcement of rights arising from a contract or right given by the Partnership Act.

Relatively Inexpensive
A General Partnership is cheaper to start than an LLP and even over the long-term, thanks to the minimal compliance requirements, is inexpensive. You would not need to hire an auditor, for example. This is why, despite its severe shortcoming (unlimited liability), home businesses may opt for it.

DOCUMENTS REQUIRED

 

IDENTITY PROOF ( DRIVING LICENSE, PASSPORT, AADHAR CARD)


NATURE OF BUSINESS (PAN CARD)


ADDRESS OF BUSINESS (ELECTRICITY BILL, RENT AGREEMENT)


CAPITAL AMOUNT

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.

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