What is a partnership firm?
Under the partnership firm, two or more individuals come together in agreement to become partners to run a business. They are easy to start and most of the partnership firms in existence today are either small or medium firms.
What are the features of a partnership firm?
- The legal document mentioning the partnership between two entities is enough for creating the partnership.
- The profits obtained out of the business are shared equally among all the partners.
- The nature of liability maintained by the partners is similar to that of the sole proprietorship.
- The control over the management rests with each of the partners.
Why should you register as a partnership firm?
- Unlike the other companies, the partnership form does not have to file for the annual accounts with the registrar
- The partnership firm can have any name of their choice after agreement between the partners in the firm
- Without much of the legal compliances bring you down, the partnership firms are easy to start
Some things that you should know
Number of partners
The minimum number of partners for starting the partnership firm is two, while there can be even more members as partners for a particular business. All profits and losses are shared equally by the partners.
Partnership firm registration
Registration of the partnership firms is a must if you wish to bring case in the business to the court. Also, if you do not want any usage of the business name for other activities, registration is a must.
Relationship with the firm
The partners are not considered to be a separate entity from the firm. As the partners are involved in the business together, they are liable for the events taking place in the name of the partnership firm.
Documents required
- Form No. 1
- Original copy of the partnership deed bearing the signature of all the partners
- Declaration affidavit showing the proof of partnership intent between the partners
- Rental agreement of the place chosen to run the business for the partnership firm
Process of registration
- Draft a deed to show proof for the partnership between two more entities
- Register the partnership deed with the required authorities
- Obtain the PAN and the TAN for the registered partnership firm
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