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Company Setup
 

Partnership Firm

 
Partnership is defined as a relation between two or more persons ho have agreed to share the profits of a business carried on by all of them or any of them acting for all. The owners of a partnership business are known as the "partners" and collectively as a "firm". Partnership is an appropriate form of ownership for medium sized business involving limited capital. This may include small scale industries, wholesale and retail trade, small service concerns like transport agencies, real estate brokers,professional firms like chartered accountants, doctor's clinic, attorney or law firms etc. It is mandatory for partners to share profits among themselves.

A partnership is one of the oldest business structures in India and is governed by the Indian Partnership Act, 1932. A partnership firm does not have an independent status apart from the partners constituting it. A partnership is not a legal entity; it has a limited identity for the purpose of tax laws. Any two people who are capable of entering into a contract can start a partnership business under an agreement called a partnership deed. The partnership agreement can be oral or written. It is not mandatory to register a partnership deed, but it is advisable to do so for evidential purposes since a firm cannot file a suit against a third party if it is unregistered.

Forming a partnership firm is simple since it does not have to be registered to start operations. A partner is an agent of the firm and all other partners. Each partner is liable for the actions of the other partners

 
The “Partnership Deed”, as stated above, must contain:

The amount of capital contributed by each partner
Profit or loss sharing ratio
Salary or commission payable to any partner, if any
Duration of business, if any
Name and address of the partners and the firm
Duties and powers of each partner
Nature and place of business; and
Any other terms and conditions to run the business
 

Partnership Business: Advantages and Disadvantages

Advantages:

Ease of formation
More capital investment and credit opportunities and
Better judgment and more managerial abilities

Disadvantages:

Absence of ultimate authority
Liability for the actions of other partners and
Unlimited liability

Example: Let us take the example of Mary. She started a Partnership business and unfortunately suffered a loss of 1 million rupees. Her house, car and jewellery were used to repay the debts of the Partnership firm.

Had she started a Company, only the amount she had invested in the business would have been used to repay the debts of the business. Her house, car, jewellery etc. would have been safe.

That is why people still prefer to form a Company even though a Partnership is much easier to start.

Procedure for registering partnership concern:
our team is trained to handle the entire process of registering a partnership, end-to-end. Just submit some basic documents with us so that we can get started.
Your Address Proof (like a Driving License or Voter ID card)
Your PAN Card
A Passport Sized Photo

These documents are required for each person you will have in the Partnership. Confused? Ask for sample documents so that you get 100% clarity.

 
Mob : +91-9022060498 E-mail : info@legalbabu.com
 
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