What is Partnership Business
It is a business entity that is formed, operated, and managed by a group of individuals named as partners. While most small and medium business persons especially belonging to the unorganized sector, preferred to form a partnership before, the efficacy of this kind of business is steadily losing its relevance due to the popularity and umpteen benefits that a limited liability company enjoys at present
Why do Businessmen Choose Partnership Firm Registration?
Here’s Top 6 Reasons for What Entrepreneurs Opt Partnership Business Structure
- Easiest Business Format-Partnership firm is considered as one of the easiest and simplest form of business type, required minimal formalities and documentations to do firm registration
- No Prescribed Minimum Capital-In this business structure type, there is no prescribed limit of minimum capital is required on formation. Partners can start with any capital which suits to their business.
- Ease in Decision Making-In the concept of partnership firm registration, partners can take faster decision on company formation. No need to follow either regulation for passing the resolution.
- Comparatively Economical-In comparison to LLP and Private Limited Company; Partnership Firm is much cheaper to start and uphold. Even this business can long run with inexpensive.
- Fund Raisingt-In competency of partnership firm and it’s availability of multiple partners help leads viable contributions. Additionally, banks also consider partnership firm for sanctioning loans.
- Minimal Compliance-Partnership firm workout with very minimal compliance. Compared to LLP, Partnership has less annual and tax compliances. No need to appoint an auditor for Firm.
Types of Partnership Firms
- Registered- Functions according to the rules of the Partnership Deed and the ‘Indian Partnership Act’ of 1932. It is possible to take legal action against a partner who violates the code once the business has been registered.
- Unregistered- Depends heavily on the Partnership Deed that can be modified with the concurrence of all partners. However, the partners cannot be sued in a court of law for violating the rules.
Information to be included in the Partnership Deed
- Names & addresses of all partners
- Partnership name
- Date when the business became operational
- Capital provided by each partner
- Profit sharing percentage for each partner
- Rules for adding more partners
- Rules for removal of a partner
- Rules for dissolving the partnership
Requirements for Registration of a Partnership Business
- The firm must include at least two partners
- There is no amount specified as the minimum capital required to start a partnership firm
- Registration of the company is not mandatory but most legal professionals advise it in order to avoid legal actions taken by any of the partners in future
- A partnership deed is required to be prepared that includes all the terms and conditions of the business including profit and liabilities sharing percentage
- The partners are considered to be owners of the business and a partnership company is not regarded as a legal entity.
Advantages of registering your business as a Partnership Firm?
- Simple, uncomplicated process requiring very less formality
- Registration is not mandatory to form and operate a partnership business
- However, bigger firms opt to register their business and the formalities are overseen by the ‘Registrar of Firms.’
- The company can choose to operate in any name as long as it does not violate the trade mark regulations.
- The company is not required to file their accounts annually with the Registrar unlike other business entities.
- The firm can sue any partner or a third party for compensation, if it remains unregistered.
- It is cost effective and the expenses being considerably lesser than a LLP
Documents required to Register a Partnership Firm Registration
- Self attested PAN Card (2 Copies)
- self attested Address Proof - Voter ID/Adhaar Card/ Driving License/Passport (2 Copies)
- 4 passport size photographs
- self attested Bank Statement/ Electricity Bill/ Mobile Bill/ telephone Bill not older than one month (passbook copy is not accepted)
- Rental agreement and electricity bill of office address(Electricity bill not older than 1 month) if rented premises
Partnership Firm Registration Process
These following steps are involved for registration of partnership firm in Bangalore India:
- Select the name of partnership firm
- Prepare partnership deed or agreement for firm
- Make an application in Form A to the Registrar of Firms for registration of partnership firm
- Partnership deed needs to file with the Registrar
- Pay necessary fees and stamp duty
- Get certificate of partnership firm from Registrar
You will get the documents after Registration of your Company
- Certificate of Partnership Firm
- Partnership Deed
- PAN of Partnership Firm
- TAN of Partnership Firm