Partnership Firm

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Overview of Online Partnership Firm Registration in India.

No heavy legal formalities are required to form a partnership firm for the establishment of a partnership firm registration, no heavy legal formalities are required. It is very easy to set up a partnership firm in which two or more persons can work for their mutual benefit.

In a partnership firm, the partners have unlimited liability, if the profits of the firm are not sufficient to meet their losses, they are liable with their personal assets. When registering a partnership firm, it is not necessary to file an annual report with the registrar on an annually basis.

All the terms and conditions of the partnership firm must be mentioned in the partnership deed, mentioning all the specific requirements in the partnership deed such as profit sharing ratio of partners, their interest rates, terms of appointment and removal of partners. The partnership deed should be prepared on stamp paper as per the Indian Stamp Act, 1899.

Partnership firm registration has no separate legal entity. Partnership firm cannot be a member of any other company in its own name except Section 8 company.

The maximum number of partners in a partnership firm is 20 and in banking sector the number cannot exceed 10. The partners in a partnership firm are free to choose the name of the firm, but it cannot be the same as the name of an already registered firm.

Why should you go for Partnership Firm Registration in India?   

Easy to form: Like sole proprietorships, partnerships can be formed easily and without any prescribed legal formalities. There is no need to register the firm registered. A simple agreement or partnership deed, either oral or written, is sufficient to create a partnership. Note: Partnership registration is voluntary in most states. However, it would be best to check your state's rules to be sure.  

Availability of large resources: since two or more partners join together to form a partnership business, it is possible to pool more resources than a sole proprietorship. Partners can contribute more capital, more effort, and more time to the business.

Better decisions: The partners own the business. Each of them has an equal right to participate in the management of the business. In case of any conflict, they can sit together to solve the problem. Since all the partners are involved in decision making process, there is less scope for rash and hasty decisions.

Flexibility in operation: a partnership firm is a flexible organization. The partners can decide to change the size or nature of the firm or the scope of its activities at any time. It is not necessary to follow any legal procedure. Only the consent of all the partners is required.

Sharing risks: In a partnership firm, all partners "share" the business risks. For example, if there are three partners and the firm makes a loss of Rs.12,000 in a particular period, then all the partners can share that loss and the individual exposure is only Rs.4000. This can encourage the partners to take more risks and thus grow their business.

Protection of interest of individual partners: In a partnership firm, each partner has an equal say in decision making and running the business. If a decision goes against a partner's interests, they can prevent that decision from being made. In extreme cases, a dissatisfied partner can withdraw from the firm and dissolve it. In such extreme cases, the "partnership agreement" is required. In the absence of the partnership agreement, there is no legal protection for the partners.

Advantages of specialization: since all partners own the business, they can actively participate in every aspect of the business according to their specialization, knowledge and experience. If you want to set up a firm to provide legal advice to people, then one partner can handle civil cases, one can handle criminal cases, another can handle employment cases and so on, depending on the individual specialization. Similarly, two or more doctors with different specializations can set up a clinic in partnership.

List of Documents Required for Registration of a Partnership Firm in India.

• Partnership deed

• Identity proof of each partner (any one)

  o Aadhar card

  o PAN Card

  o Driving License

  o Passport

• Address proof of each partner

  o Bank Statement

  o Electricity bill

  o Phone bill

  o Water bill

• An address which will act as the registered address of the partnership firm.

Fees for Partnership Firm registration in India.

 Time required for Partnership Firm registration fees in India.

Process of establishing a Partnership Firm in India.

Difference between Partnership and Limited Liability Partnership (LLP)

Let us now consider some essential points of difference between these two popular forms of business.

Frequently Asked Questions on Partnership Firm

At least two persons are required to form a partnership firm. A maximum of 20 partners are allowed in a partnership firm.
The partner must be an Indian citizen and resident of India. Non-Resident Indians and persons of Indian Origin can only invest in an Ownership Company only with the prior approval of the Government of India.
Yes, there are procedures for converting a partnership firm into a company or an LLP at a later date. However, the procedures for converting a partnership firm into a company or an LLP are cumbersome, expensive and time consuming. Therefore, it is wise for many entrepreneurs to consider and incorporate an LLP or company instead of a partnership firm.
For all activities or operations of the firm, during the course of business while the person is a partner, each individual partner is liable at that time individually as well as jointly with all other partners.
There is no minimum capital required to register a partnership firm in our country. All you need is the current account balance and the rest of the documents as stated above.
The partnership firm must file its annual tax return with the Income Tax Department. Other tax filings, such as filing of GST Return, TDS Return, ESI & PF Return Etc may be necessary from time to time, based on the business carried on.

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