What is a General Partnership?
A Partnership firm is an organization which is formed with two or more persons to run a business with a view to earn profit these firms are governed by Indian Partnership Act 1932. However Partnership firm is preferential over Limited liability partnership (LLP) concept because of minimum cost and regulatory compliances. Registration is optional for General Partnerships.
6 Essential Facts on Partnership
What are reasons of incorporation of partnership firm?
A partnership firm is defined by Partnership Act 1932. For incorporating small business partnership firm is an excellent choice as there is minimum cost and less formalities and compliances. Registration is not mandatory in General Partnerships. With the introduction of limited liability partnership in India, partnership firm are fast losing there prevalence due to the added advantages such as reduced cost of setting up offered by LLP.
Explain partnership firm?
A partnership firm is an arrangement between two or more persons who are agree to carry a business with a motive to earn profit. Partnership firm is ideal for small business in the unorganized sector. As per partnership deed, profit and loss are shared by partners in the predetermined ratio.
What is legal status of partnership firm?
Partnership firm as no distinct legal separate entity as the partners in a partnership firm are the owner. Partners of the firm are liable to bear any loss and debt incurred by firm. Any legal issues or debt incurred by the firm is the responsibility of its owners, i.e the partners.
What are minimum and maximum limits of partners in partnership firm?
Minimum number of person in partnership firm is 2 and maximum limit is 10 in case of banking business and 20 in case of all other types of business
Is there mandatory requirement to register partnership firm.?
No, registration of a partnership is optional although in case of any legal suit in court by the partner or firm, partnership firm should be registered.
What are important points should specify in partnership deed?
Partnership should specify name of partnership firm, name and address of partners, date of commencement of firm, profit sharing ratio of partners, amount invested by each partner and various terms and conditions to be followed by each partners.
Documents Required for Partnership Registration
Following documents are required to be submitted
- Application for registration in the prescribed Form No. 1
- Certified copy of Original Partnership Deed, signed by all partners
- Affidavit declaring intention to become partner
- Proof of ownership of the place of business or Rental or lease agreement
Advantages of a Partnership
In General Partnerships there is no requirement to hire auditors for getting books audited. There is less compliances required to follow as compared to LLP. General Partnerships do need to file income taxes and depending on turnover, service and sales tax.
Easy to Begin
A partnership firm can be easily incorporated as there are no cumbersome legal formalities. It can be started with in 2-4 days without registration, however in case of filling suit against another firm or partners in court it is necessary to get firm registered to protect the rights given by contract or Partnership Act
As there is minimum compliances to be followed in General Partnership, thus it is very cheaper than LLP As there is no need to hire an auditor, and thus it is best option for home business.
General Partnership Procedure
4 Working Days for registration
After receiving your request, we will start your registration process as per details and information provided by you. This process will take 3-4 working days.
4 Working Days
For further any change in application, 4 working days will be required.