Partnership Firm

According to the Indian Partnership Act, 1932, Section 4, “the relationship between persons who agreed to share the profit of business carried on by all or any them acting for all.” Business partnerships are done on the condition of sharing profit by two or more persons who agreed to run a business together.

Number of Partners:
Maximum of ten people for banking business and twenty people for a non-banking business.

Profit and Loss Sharing:

Contractual Relationships:

Lawful Business:
Partnerships are formed to carry on lawful business and share losses and profits.

Liability:
Each partner has some liability in the firm

Easy Formation:

Capital Availability:
When more than one person is involved, it is not difficult to make people trust in your firm and seek loans or investors.

Combined Talent:
With more people contributing to a business is not only just means that more manpower but also skills. People with various specialized work areas contribute to the business.

Division of Risks:
Now that not just the profits are shared, but also the losses.
Legally it is decided what losses will be incurred by each of the partners.

Tax benefits:
Yes! it can be one big saver of tax to have a partner in your business.
Tax rates for partnership firms are much lower than the proprietorship and company firms.

Unlimited Liability:

Number of Members:
The maximum number of partners a firm can have is restricted to 20.
In case of an LLP, there is no restriction on the max quantity of partners.

No Central Figure:

Trust:
A partnership firm can sometimes operate without any structured regulations; if there is distrust, this generally takes the business down.

Anytime Dissolution:

• The name must not be similar or identical to any existing firm doing business with the same name.
• The name must not contain words like an empress, empire, emperor, or any other word that show sanction or approval of the government.

(I) General Information:

1. Name and address of the partners and firm
2. Nature of business
3. Date of starting of business
4. Capital to be contributed by each partner
5. Profit & loss sharing ratio among the partners

(II) Specific Details:

1. Interest on capital invested by partners, drawings by partners, or any loans provided by partners to the firm.
2. Salaries and commissions or any other amount to be payable to partners.
3. Mention the rights of each partner, and include additional rights to be enjoyed by the active partners.
4. Duties and obligations of all partners.
5. Adjustments and processes to be followed in case of retirement or death of a partner or dissolution of the firm.

• Application for registration of partnership firm (Form 1).
• Specimen of Affidavit.
• Certified original copy of Partnership Deed.
• Proof of principal place of business (ownership documents or rental/lease agreement).

Once you have submitted your documents and registrar approves then, the registrar will issue a certificate for registration.