Partnership Firm (Multi Person Firm)

A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interestbased organizations, schools, governments or combinations organizations may partner together to increase the likelihood of each achieving their mission and to amplify their reach.

A partnership may result in issuing and holding equity or may be only governed by a contract. All the conditions, rewards and risks can be compiled in a document called partnership deed.



Inclusion

Customized Partnership Deed

VAT/SERVICE TAX/EXCISE/IEC or any other registration applicable and selected by the user.

Courier charges of sending the original certificate and Partnership deed at your address.

Any Government Fee or charges payable.

Application of PAN and or TAN

EXCLUSIONS

Inspection fee payable at the time of visit to the officer if any.

Fresh application fee if registration applicable is rejected due any discrepancies in documents of the applicant.

REQUIRED DOCUMENTS

Identity and Address Proof of the Applicant partners

Copy of PAN card of partners (for registration with govt. department)

Passport size Photographs of partners, if applicable.

Any other documents according to selected registration.

TIMELINE

2 day process for gathering the necessary details and documents

1 day process for preparing standard partnership deed, (customization depends upon the time taken by client)

7 days process of PAN application

1 day process for getting documents ready for submission to govt. after receipt of PAN.

2 day process for submitting application to government after signing and verification of all documents.

1 day process for providing certificate after approval from relevant department and updating its status.




FREQUENTY ASKED QUESTIONS

1. What is partnership?

A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests for earning profits. The partners in a partnership may be individuals, businesses, interest based organizations, schools, governments or combinations organizations may partner together to increase the likelihood of each achieving their mission and to amplify their reach. All the conditions, rewards and risks can be compiled in a document called partnership deed. A partnership firm can be registered or unregistered, registration of partnership firm under The Indian Partnership Act, 1932, is not mandatory. With the popularity of limited liability partnership firms in india, partnership firms are losing their relevance due to advantages associated with limited liability partnership firms combining advantages of partnership firm and company.

2. Whether registration of partnership firm is mandatory?

No, registration of partnership is no mandatory under Indian Partnership Act, 1932,.

3. Whether it is mandatory to form a partnership deed?

No it is not mandatory to form partnership deed setting forth terms and conditions of partnership.

4. What rules will apply in case of absence of partnership deed?

a. All partners will divide profit and loss equally.
b. If any partner gave loan to firm, partnership firm will give interest on that loan.
c. No salary is given to any partner for participation in the work of partnership firm.
d. No interest will be given on the capital of partners.
e. Partnership firm will not take interest on his given amount in the form of drawing to any partner.

6. Whether registration with government departments are mandatory?

No, only applicable government registrations are mandatory like if sales exceed specified limit of turnover then registration with Value Added Tax (VAT), Service Tax Registration, Excise or shop and establishment as applicable are mandatory. However as per RBI norms government proof of business is mandatory to open a current bank account, if the partnership firm is not registered under Indian Partnership Act, 1932, 1932, in that case registration with either Value Added Tax, Service Tax, Excise, Import Export Code, Shop and Establishment or other local commercial departments are required. To know about registration with government departments click here.

7. What are the maximum number of partners admitted in partnership?

The maximum number of partners than can exist in partnership is 10 in case of firm carrying on banking business and in case of any other nature of business the limit is 20. However this limit is governed by companies act and not the Indian Partnership Act, 1932.

8. What are the advantages of Start business as Partnership?

Advantage
EASY FORMATION

A partnership firm can be formed just by creating a partnership deed between partners.

Advantage
LARGER RESOURCES

Due the more number of members the partnership firm has larger resources for the business operations as compared to sole proprietorship.

Advantage
FLEXIBILITY IN OPERATION

Due to the limited number of partners there is flexibility in the operations of business as the partners can amend any objectives or change any operations any time by mutual consent.

Advantage
BETTER MANAGEMENT

Business of a partnership firm is very well managed by all the partners as they take interest in the daily affairs of business because of the ownership, profit and control.

Advantage
SHARING OF RISK

In partnership every partner bears the risks individually as it is easier compared to sole proprietorship.

Advantage
PROTECTION AGAINST FRAUD

In a partnership firm interest of every partner is protected against any fraud.

9. What are the disadvantages of Start business as Partnership?

Advantage
Instability

A partnership firm does not exist for an indefinite period of time. The death, insolvency or lunacy of a partner may lead to dissolution of the partnership firm

Advantage
Unlimited Liability

Liability of every partner in a partnership firm is unlimited as any of the partners may be called upon to pay all the debts even from its personal properties. A single wrong decision by one partner can lead other partners in heavy losses and liabilities.

Advantage
Lack of Harmony

According partnership agreement every partner has equal rights. Some situations might occur in which one or the other partner will not agree on the same thing which will cause difference of opinion resulting mistrust and disharmony among the partners.

Advantage
Limited Capital

Due to the restriction on the maximum number of members of 20, a limited amount of capital can be raised. However in case of private limited companies there is limit of 200 shareholders.

Advantage
No legal status

A partnership firm does not have a legal status like a company or Limited liability partnership.

Advantage
Transfer of ownership

In a partnership firm it is not easy to transfer ownership. Consent of every partner is required in order to transfer ownership.

10. Can a partnership firm invite investor’s money?

Yes, other partners with their consent surrender their part of shareholding in other person and can admit it as partner and thus invite investor’s money. Moreover secured and unsecured loan can also be obtained by the firm from investors on interest. Further bank loans can also be brought, however the bank a credit rating give more preferences to Companies and Limited liability partnership.

11. How can i compare partnership with other form of business?

Basis Sole Proprietorship Partnership Limited Liability Partnership Pvt. Ltd Co OPC Public Limited Company
Annual income tax return filing Filing of return is compulsory only if the Gross Total income exceeds the Exemption limit. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory
Statutory Audit Not Applicable Not Applicable Not Applicable Compulsory Compulsory Compulsory
Liability Unlimited liability Unlimited liability As the name itself suggests, there is limited liability in case of limited liability partnership. Limited by Guarantee or Shares Limited by Guarantee or Shares Limited by shares
Ownership and Control One person has total control and ownership of the enterprise. Ownership and Control is through mutual agreement. Ownership and control is through mutual agreement. Ownership and control is amongst the shareholders of the co. Ownership and control is in the hands of only one member. Ownership is amongst the shareholders and control among the directors chosen by shareholders
  One Minimum 2 Minimum 2 Minimum 2 One Minimum 7
Complications Sole proprietorship is the least complicated form of business. Partnership is also less complicated as compared to company but more complicated as compared to sole proprietorship. Partnership is also less complicated as compared to company but more complicated as compared to sole proprietorship. Most complicated as compared to sole proprietorship and partnership firms. Most complicated as compared to sole proprietorship and partnership firms. Most complicated as compared to private limited company
Risk Risk is very high. Risk is high. Risk is low as liability is limited. Risk is low as shareholder’s liability is restricted to unpaid calls only or any specified amount of guarantee in case of co. limited by guarantee. Risk is low as liability is limited. Risk is low as liability is restricted to shareholding amount and unpaid calls only.
Transferability Cannot Transfer, only in case of death of proprietor New partners can be admitted and old partners can resign New partners can be admitted and old partners can resign Shares can be transferred with restrictions to public There is restriction of transfer of shares subject to change in nominee and directors Shares can be easily transferred without restriction.