BBNC

Partnership Firm


Relationship between two or more individuals who have agreed to share profit of a business is called as partnership. Partnership is not a legal entity, which means it cannot be sued or can sue any other person or firm.
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Overview

Persons who have entered in to partnership firm to carry out a business is called as partners. Liability of each partner in a partnership firm is unlimited. Which means if a partnership firm faces losses, then the losses will be recovered from the personal property of the partners irrespective of the investment that they have made.

Partnership Firms in India are governed by the Indian Partnership Act, 1932. As per Section 4 of the Indian Partnership Act. a partnership consists of three essential elements.
1. A partnership must be a result of an agreement between two or more individuals.
2. The agreement must be signed amongst the partners to share the profits obtained from the business.
3. The business must be run by all or any of them representing the rest.



Benefits of Partnership Firm

The benefits of forming a partnership firm are as below

Ease of Formation

Unlike any registered entity type, it is easy to form a partnership firm in India. The partnership deed can be written or orally said. As registration of a partnership firm is not compulsory it is quite is to form a partnership firm.

Flexibility of Operations

Considerable freedom is allowed with respect to the operations of the company. Government approvals are not required to take to change the nature of business or location of business.

Taxation

The Income tax Act 1961 treats partnership as a separate person and its tax is also calculated just like an individual. Hence the tax for partnership firm is flat 30% in most of the sectors.

Less Compliance burden

Compared to other registered type of entities partnership firms does not have any regular compliance burden. Such as holding a board meeting, Director’s compliance etc. hence the compliance cost is saved in the partnership firm.

Easy Dissolution

it is quite easy to close a partnership firm, the firm can be dissolved on a death or insolvency of any partner.

Checklist/Requirements

Documents Required to form a Partnership Firm

• Partnership deed
• Identity proof of each partner (any one)
  o Aadhar card
  o PAN Card
  o Driving License
  o Passport
• Address proof of each partner
  o Bank Statement
  o Electricity bill
  o Phone bill
  o Water bill
• An address which will act as the registered address of the partnership firm.

Process of Forming a Partnership Firm

Step 1: Choose a name for the partnership firm

Step 2: Draft a partnership deed which includes all the details of the business and partners

Step 3: Apply for a PAN card in the name of partnership firm

Step 4: Apply for a PAN card in the name of partnership firm

Key Deliverables

a. PAN Number of the partnership firm

b. Partnership Deed

Partnership Firm incorporation

Why Choose Us

  Entrepreneur Friendly

We make the process so easy and fast that you will not even feel the headache of all the paperwork, and our professionals will provide you all the promised deliverable within a given span of time.

  Experienced Professionals

All our professionals are qualified and specialized in that particular work. Making sure no mistakes are done at the time of filings with the authorities so that company won’t have to pay any penalties due to mistakes.

  One Stop for All Your Requirements

We support you throughout the journey of your business, from the incorporation, Accounting and taxation support, Secretarial compliance support, and Legal support.

  Cost-Effective

We believe that cost plays a vital role in any company’s growth stage, that’s why we do not surprise our clients with hidden charges, you pay what you see in the initial proposal.


Frequently Asked Questions


Can partnership firms open savings bank account?
Savings deposit accounts can be opened by the following:
  o Individuals - individual or joint account
  o Hindu undivided family
  o Trusts
  o Associations
  o Charitable institutions
  o Societies
However, proprietorship firms, partnership firms, private limited companies and public limited companies cannot open savings deposit accounts.
As per Indian Companies Act, 2013 a Partnership firm can have maximum 100 Partners.
Though, it might sound strange but upper limit on number of partners are fixed under Companies Act and not in Partnership Act.
Only “persons” (either natural or artificial) can enter into a partnership. A partnership firm being a compendium of persons but not a juridical person, it cannot become partner into another partnership.
A partnership firm can be a member in a company and a member can also a shareholder of a company. so yes, it can be a shareholder.
For any NRI to become a partner in a partnership firm there is no restriction, however, the law restricts the foreign investment by NRI by way of capital to the firm.
There are two ways to invest into a partnership firm by the NRI. All the two ways are described below:
i. Investment on No repatriation basis: he NRI may invest into the partnership firm on non-repatriation basis, i.e., capital invested once cannot be taken back by the NRI to any country outside India.
ii. Investment on repatriation basis: If the NRI makes any investment on repatriation basis, then he shall first have to take prior approval of the government before investing.