Created under Partnership Act 1932.
WHAT IS PARTNERSHIP FIRM?
Partnerships in India are governed by the Indian Partnership Act, 1932. As per the Partnership Act, Registration of Partnership Firms is optional and is entirely at the discretion of the partners. The Partners may or may not register their Partnership Agreement However, in case the partnership deed is not registered, they may not be able to enjoy the benefits which a registered partnership firm enjoys.
ADVANTAGE
- 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 TO REGISTER PARTNERSHIP FIRM
- Copy of PAN Card of partners
2. Electricity Bill/ Water Bill (Business Place)
3. Copy of Aadhaar Card/ Voter identity card
MINIMUM REQUIREMENTS
- Minimum 2 Partners
2. No fixed minimum Capital Requirement
FAQ
What is a Partnership?
Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.
What are the necessary elements that are required to form a partnership?
Three elements are necessary to form a partnership: 1. There must be an agreement between two or more persons. 2. The agreement must be to share the profits of the business. 3. All partners together, or any one, on behalf of the others must carry on the business.
I am not a citizen of India. Can I be a partner in an Indian firm?
The Partnership Act does not prohibit a non-citizen from joining an Indian partnership firm, subject to necessary clearances and permissions from satisfactory authorities in this regard.
What is the capital of a partnership firm?
Capital is the initial amount in cash or kind contributed by the partners to start the business. It is not necessary for each partner to contribute equally to the capital. Contribution is based on the agreement between the parties.
Is a deed of partnership necessary?
It is not compulsory for a partnership deed to be in writing. Partnerships can also be oral.
Who can be partners?
Partners must be major (above the age of 18), should be sane and should not be disqualified by law from entering into a contract.
Can a firm become a partner in another firm?
A partnership firm cannot become a partner of another firm because it is not a legal person. However the partners may be partners in another firm in their individual capacity.
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