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In India, establishing a general partnership firm is a simple and popular way of starting a business. Such a business can be formed by two or more people who work in tandem and are called partners. All partners in a partnership firm own the business, manage it, and also share their income as well as liabilities amongst each other.
It is easy to set up a partnership firm but each partner holds innumerable liabilities. Liabilities of partners are unlimited, even the personal properties of the partner shall be used to settle the liabilities of the firm.
For a partnership firm registration process, partners must collectively decide upon a firm name. They must create a partnership deed that includes the rights and responsibilities of each of the partners.
Any area that is not covered under the partnership deed comes under the regulations of the provisions of the Indian Partnership Act 1932.
A partnership firm registration is not obligatory in India except that in Maharashtra. However, a registered partnership firm can enjoy many benefits compared to an unregistered one. Hence, it is advisable to get your partnership firm registered.
In India, Myefilings is one of the most affordable, experienced,
and efficient service providers for your partnership firm registration.
To end a partnership firm all you need to do is sign a dissolution deed. Unlike a company or an LLP, a partnership firm needs very few legal processes to wind up a business.
As compared to a company or an LLP, a partnership firm does not have too many annual or event-based compliances and regulations to follow.
As a partnership firm, it is not necessary for you to file audited financial statements with the registrar of firms. This leaves your partnership firm free from getting your books of accounts from being audited. However, under the Income Tax Act, it may be necessary for you to get tax audits if your income surpasses the agreed limits.
As per the act, all the partners of a partnership firm have the same managerial rights. But as per your convenience, you can have some partners as managing partners while others can willingly give in their managerial rights to the managing partners. The partners have shared and numerous other responsibilities.
Partners manage their business very well in a partnership firm as they show interest in the day-to-day affairs of their business because of ownership control and profits.
You and your partners can choose any name for your firm. However, you need to be vigilant so that your chosen name is unique enough so as not to infringe on the copyright of any other person or any trademark. You should also get a trademark of your chosen name for the partnership firm so that no other people can use the same name for their business.
It is easy to form a partnership firm and it involves very few legal formalities. Except in Maharashtra, it is not mandatory to register a partnership firm. This allows your partnership firm to begin its business right away after you and your partners enter into the partnership deed. However, owing to the benefits a registered partnership firm receives; it is always advisable for you to have a registered partnership firm.