A Partnership Firm is a popular form of business constitution for businesses that are owned, managed and controlled by an Association of People for profit.A formal agreement (known as partnership deed) is made between two or more parties. The partnership deed determines the ownership of the firm, profit sharing ratio, rights and responsibilities of each partner. The partnership deed can be registered with the registrar.The partners share the risk and responsibilities and hence shreds the burden of an individual partner. More capital and expertise are combined when two or more parties come together resulting in reaching the business goal(s) easily.
There are two kinds of partnership firms – Registered and Unregistered. The Partnership Act, 1932 validates both types of partnership firms and defines the structure of a partnership firm by providing all the necessary provisions to run the same. An unregistered firm has a few limitations over the registered firms. However, a firm can be registered anytime after formation and hence the drawbacks can be overcome later.
Easy to Begin
Requires minimal registration and formalities.Registration not essential but the firm will be deprived of certain legal benefits if not registered.The Registrar of firms will be responsible for registering partnership firms.
The partners mutually decide on how to operate the business.The Partnership Deed can be changed according to the requirement even after partnership deed registration is completed. There are no limitations or restrictions on the partners in regards to running the business, as long as it is covered under the signed agreement.
Various Financial Returns to the Partners
Partners involved get various types of returns for their capital as well as their individual efforts.The working partners receive remuneration along with the interest on capital and share of profit, as maybe agreed by the partners.The share of profit from partnership firm is exempt for the partner receiving it.
The work responsibility is shared between the partners. They manage the business together.The responsibility of a particular task or field can be assigned to one or more partners and the same can be indicated in the partnership deed.
Pre-defined Object or Period
When a partnership firm is registered, the deed itemizes the defined business objectives and activities.A partnership can be formed for a specified period or to complete a specific project or object.Once the same is completed, the partnership stand dissolved.
A self - attested copy of PAN Card of all Partners.
A self – attested copy of aadhar card and voter ID/passport/Driving License of all partners.
Business Address Proof
Utility Bill (Electricity Bill) of the place of business.
Rent Agreement and NOC from the owner of the place of business, if rented.
Signed Partnership Deed
Partnership deed in non-judicial stamp paper signed by all Partners. Value of stamp paper will vary based on the investment in Partnership Firm.