Why Register a Firm ?
Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. In such a business, the members are individually partners and share the liabilities as well as profits of the firm in a predetermined ratio. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.
A partnership firm is best for small businesses that plan to remain small. Low costs, ease of setting up and minimal compliance requirements make it a sensible option for such businesses. Registration is optional for General Partnerships. It is governed by Section 4 of the Partnership Act, 1932. For larger businesses, it has lost its relevance with the introduction of the Limited Liability Partnership (LLP). This is because an LLP retains the low costs of a partnership while providing the benefit of unlimited liability, which means that partners are not personally liable for the debts of the business.
Important Aspects
MINIMAL COMPLIANCE
General Partnerships do not need to appoint an auditor or, if unregistered, even file annual accounts with the registrar. Annual compliances are also fewer as compared to an LLP. General Partnerships do need to file Income Taxes and, depending on turnover, service and sales tax.
EASY TO START
It can be started with just an unregistered Partnership Deed in 2 to 4 days; registration, however, does bring a few advantages. It would enable you to file suits in court against another firm or partners in the firm for the enforcement of rights arising from a contract or right given by the Partnership Act.
RELATIVELY INEXPENSIVE
A General Partnership is cheaper to start than an LLP and even over the long-term, thanks to the minimal compliance requirements, is
inexpensive. This is why, despite its severe shortcoming (unlimited liability), home
businesses may opt for it.
Documents Required:
- Form No.1 As Prescribed Attested Copy Of The Partnership Deed One Set.
- Ownership Prove Of Principal Place Of Business.
Frequently Asked Questions
Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.