Registration of Partnership Firm
Partnership Firm are the most popular forms of business organisations in India for the Partners Entrepreneurs. Only two persons are required to start a partnership firm.
A business organization in which two or more individuals manage and operate the business. Both owners are liable for the debts from the business. The owners of a partnership business are individually known as the “partners” and collectively as a “firm”.
In India, Partnership firms are of 3 Types:
1. Unregistered Partnership Deed.
2. Partnership Registered with Magistate
3. Limited Liability Partnership
As per Partnership Act, 1932 registration of Partnership is not mandatory.
Step 1 – Partnership deed is drafted and Notarized
Step 2 – PAN and TAN are applied
Step 3 – Bank account is opened to start the business
1. Pan Card, Identity Proof, Photo & Address Proof of all Partners
2. Ownership proof of proposed registered address
Partnership Registered with Magistrate
- Here both partners have to go to Magistate, who check authenticity of Documents and Provide a registration Certificate.
- A partnership firm is required to be registered under sections 58 and 59 of the Partnership Act.
Limited Liability Partnership
It is best form of Partnership, it constitute Limited Liability and registration with Ministry of Corporate Affairs.
1. Low cost of Formation and compliances and less statutory compliances as compared to Private limited Companies
2. Better decision making and control over the business.
1. A partnership usually has limitations that keep it from becoming a large business.
2. Unlimited liability. General partners are liable without limit for all debts contracted and errors made by the partnership.
3. Since decisions are collective ,disagreements can occur.
Taxation of partnership
Tax will be payable at a flat rate of 30% plus 3% Education cess & Secondary and Higher Education cess on the total of income tax and surcharge. Surcharge has been eliminated AY 2011-12 onwards.
Step to Register a Partnership Firm
A partnership is easy to form as no cumbersome legal formalities are involved. Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain legal benefits. The Registrar of Firms is responsible for registering partnership firms.
1. A partnership is formed by an agreement :- which may be either written or oral. When the written agreement is duly stamped and registered, it is known as “Partnership Deed”. Ordinarily, the rights, duties and liabilities of partners are laid down in the deed. But in the case where the deed does not specify the rights and obligations, the provisions of the THE INDIAN PARTNERSHIP ACT, 1932 will apply.
The deed, generally contains the following particulars:-
a. Name of the firm.
b. Nature of the business to be carried out.
c. Names of the partners.
d. The town and the place where business will be carried on.
e. The amount of capital to be contributed by each partner.
f. Loans and advances by partners and the interest payable on them.
g. The amount of drawings by each partner and the rate of interest allowed thereon.
h. Duties and powers of each partner.
j. Any other terms and conditions to run the business.