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.
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.