Partnership Registration- AMpuesto Startup Services

Partnership

A Partnership is a business entity in which two or more partners manage and operate a business in accordance with the terms and goals set out in the Partnership Deed. Partnership registration is relatively easy and is prevalent among small and medium sized businesses in the unorganized sectors.

For Partnership Registration, you must agree on a firm name and then establish a partnership deed. It is a document stating respective rights and obligations of the partners and to be valid it should be written and not oral. Partnership firms are the most prevalent type of business entity wherein a group of people are involved.

Comparison with Pvt Ltd Company

Legal status: A partnership firm is not considered a separate legal entity from its partners, whereas a Pvt Ltd company is a separate legal entity from its shareholders.
Liability: In a partnership firm, the partners have unlimited liability, which means that they are personally responsible for the debts and obligations of the business. In contrast, in a Pvt Ltd company, the liability of the shareholders is limited to the amount of their investment.
Number of owners: A partnership firm can have a maximum of 20 partners (in India), while a Pvt Ltd company can have a minimum of 2 and a maximum of 200 shareholders.
Management: In a partnership firm, all partners have an equal say in the management of the business, whereas in a Pvt Ltd company, the management is typically delegated to a board of directors.
Transferability of ownership: It is relatively easy to transfer ownership in a Pvt Ltd company, as shares can be bought and sold. However, in a partnership firm, ownership cannot be transferred without the consent of all partners.
Compliance requirements: A Pvt Ltd company is subject to more stringent compliance requirements than a partnership firm, including the filing of annual returns and other regulatory filings with government authorities.
Overall, the choice between a partnership firm and a Pvt Ltd company will depend on the specific needs and goals of the business owners, as well as the legal and regulatory environment in the country or state where the business will be located.

Key Benefiots of Partnership Firm: -

Low-cost start: Partnership firms are relatively easy to start, and the legal formalities are minimal compared to other forms of business entities which can keep the business cost low.
capital: -A partnership firm can raise capital from multiple partners, which increases the capital base of the business. This enables the firm to undertake larger and more profitable business opportunities.
Tax savings: Partnership firms enjoy certain tax benefits compared to other forms of business entities. For example, partners can claim deductions for their share of the profits which can reduce the tax liability of firm.
Risk Sharing: Just as partners share the profits of a general partnership, they share the same business risks, thus reducing the financial burden on each partner.
No annual compliance: Partnership firm are not required to submit annual compliance, except for tax returns. This allows them to focus more on their business.
Easily windup: A partnership firm wants to exit the business easily at any time after paying off all debts, as they do not have to comply with any legal requirements.
Quick decisions: Partnership firm have the advantage of being able to make business decisions quickly, as they only have to mutually agree on particular decision and do not have to report to anyone on their actions or decisions.
Eligible as startup: A partnership business is eligible to be registered as startup which will help to reduce their tax liability and increase the chance of fundings.

Key points to be remember while commencing business as Partnership Firm: -

A partnership business can be conducted whether registered or unregistered, as it has a unique character as a result.
If any partnership firm wants to conducts its business in an organized manner, it is necessary to conclude a partnership deed agreement among the partners and register it in accordance with the partnership act as it will help to reduce any confusion in future.
A partnership firm can convert itself into LLP or Private company whenever they want.

Process of partnership registration: -

Choose suitable name for your partnership firm
Create partnership deed that specify the terms and conditions of the partnership, profit sharing ratio, roles and responsibilities, etc.
Obtain a Partnership Identification Number (PIN) from the Registrar of Firms in your state.
Apply for Pan card for your partnership firm from NSDL.
Open a bank account in the name of your partnership firm.
Start your business according to your objectives after that.

Frequently Asked Question

Can I register my partnership firm at my home address?

Yes, you can register your firm at your home address. You just need to have electricity bill and a legal rent agreeement with the owner of the property. It is perfectly legal to register your firm on your Home Address.

Do I have to visit in person for registering my partnership?

If you register your firm with the registrar then you need to visit Sub-Megistrate Office for the registration but in case you wish to start partnership without registration then you don't need to visit any office or place.

Can I register my partnership firm at my home address?

Do I have to visit in person for registering my partnership?

Can I convert my partnership in to LLP or Pvt Ltd Company?

Yes, You can convert your partnership in to LLP or Company as prescribed by Companies Act or LLP Act. You will have to follow the process for converting your business in to a LLP or Company through Registrar of Companies.

Is audit required for proprietorship?

No, There is no law which precribes the compulsory Audit for partnership.

Will I get Partnership Registration Certificate?

No, There is no department which issue Partnership Certificate. In case you register your partnership deed to registrar of firms then you will get a signed document from registrar for your registration of business.

What are the annual statutory compliances?

The only statuory compliance for a partnership is its Income Tax Return which is to be filed annually to Income Tax Department on their respective due dates.

Can I apply for a PAN card in the name of my partnership Concern?

Yes, You can apply PAN card separately for your partnership.

How Ampuesto will help me start my partnership?

AMPUESTO will help you in registering your partnership with the best possible registration which suits your business after discussion with you. You just need to simply complete the small form and our team will call you and help you in registering your partnership in a very cost effective way.