A partnership firm is defined as a form of business which is set up by two or more people who agree on sharing their business profits and losses in the decided ratio, whatsoever be the case. The limited liability partnership (LLP) is the preferred form of business to date. While LLP was started in 2010, the Partnership Act dates back to 1932, giving evidence that the partnership businesses are the most preferred and trusted ones.
Types of Partnership Firms
To start partnership firm registration in the form of business, the only condition is to form and finalize a partnership deed under the Indian Partnership Act, 1932.
Unregistered Partnership Firm
Registered Partnership Firm
It is neither mandatory to register the firm to start a business nor is there any penalty for no-registration. It is the sole choice of the partners and business owners. The firm can be registered once it is formed. The only drawback of the unregistered firm is that it does enjoy the benefits and rights under Section 69 of the Partnership Act.
What is a Partnership Deed and how is it formed?
A Partnership Deed is a type of contract that lays down and mentions all rights, duties and other formalities regarding the partners and the firm.
The details that you should mention in the Partnership Deed are as follows:
Name of the Partners.
Name and type of business along with the capital contributions made by each partner.
The ratio of profit and loss among the partners.
Rights and Duties of each partner.
The processes that we should follow and the rules for working of the firm.
Partners themselves decide if any other information includes.
Registration of a Partnership Firm and the Documents Required
The Partnership firm registration online in India is quite easy and approachable process. Its registration takes place under Section 58 of the Indian Partnership Act. The process involves the submission of the application forms and fees to the Registrar of Firms of the particular state, depending on the location of the firm. All the partners of the firm must sign the application and provide their consent.
Once all the provisions under Section 58 are confirmed by the Registrar of Firms and they are satisfied, the firm is recorded in the entry of statements and further, the registration certificate is finally issued in the name of the firm. While the Registrar of Firms and the Income Tax Department are two different terms, the firm must apply for the registration in both.
Advantages of Partnership Firm
The incorporation and compliance are very easy, making it possible for everyone to set up their business as a Partnership Firm. These are far better than LLP or other firms as they do not involve any filing of returns or taxes, neither monthly nor annually.
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