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
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
- PAN Card (2 Copies)
- Adhaar Card/ Driving License/Passport (2 Copies)
self attested Address Proof - Voter ID/
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
PAN of Partnership Firm
TAN of Partnership Firm