Partnership Firm

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partnership firm

Partnership service refers to the formation and operation of a partnership business entity. A partnership is a legal structure where two or more individuals come together with a common goal to carry on a business and share the profits and losses. In a partnership, the partners contribute capital, skills, and resources to run the business collectively. The partnership is governed by a partnership agreement that outlines the rights, responsibilities, and profit-sharing arrangements among the partners. Partnership service involves the registration of the partnership, drafting and filing the partnership agreement, obtaining necessary licenses and permits, complying with tax obligations, and managing the day-to-day operations of the partnership. It is important to adhere to the Indian Partnership Act, 1932, and other relevant laws and regulations while establishing and operating a partnership.

how many person are required in partnership Firm:

According to Indian law, a partnership firm in startup services requires a minimum of two persons to form the partnership. These persons are called partners, and they come together with a mutual agreement to carry on a business with the intention of making profits. There is no maximum limit on the number of partners in a partnership firm, but the minimum requirement is two individuals. Each partner contributes to the partnership with their skills, capital, or both, and they share the profits and losses of the business as per the partnership agreement. It is essential to have a written partnership deed that outlines the rights, responsibilities, and obligations of each partner in the partnership.

There are different types of partnership Firms:

  • Unregistered Partnership Firm
  • Registered Partnership Firm
  • Limited Liability Partnership (LLP)

1. Unregistered Partnership Firm

According to Indian law, an unregistered partnership firm refers to a partnership that has not been registered under the Indian Partnership Act, 1932. It is formed by two or more individuals who come together with a mutual agreement to carry on a business with the intention of making profits. While registration of a partnership firm is optional, it is highly recommended to register the firm to avail of various benefits and legal protections.

Legally, an unregistered partnership firm cannot file a lawsuit against a third party or against its partners for any dispute. Additionally, partners in an unregistered firm cannot claim set-off or initiate legal proceedings against a third party. It is important to note that an unregistered partnership firm cannot avail certain tax benefits, cannot enter into contracts in its own name, and may face difficulties in enforcing its rights in case of disputes.

However, an unregistered partnership firm still operates as a legal entity, and partners can enforce their rights and obligations based on the partnership deed. Despite its limitations, an unregistered partnership firm can carry out business activities, enter into contracts, and undertake transactions.

how many person are required in Unregistered partnership Firm:

According to Indian law, a minimum of two individuals is required to form an unregistered partnership in start-up services. There is no maximum limit on the number of partners that can be involved in an unregistered partnership. However, it is important to note that as the number of partners increases, the complexity of managing the partnership and decision-making may also increase.

While the law does not impose a maximum limit on the number of partners, it is essential to ensure effective communication, coordination, and cooperation among the partners to ensure the smooth functioning of the unregistered partnership.

required documents & information:

These are the required documentation and information for an Unregistered Partnership Firm:

  • Documents of Partners:
  • ID Proof of Partners – PAN Card of Partners
  • Address Proof of Partners – Voter’s ID, Passport, Driver’s license, or Aadhar Card of Partners
  • Passport Size Photograph of partners
  • Documents and Information for Firm
  • Name of Firm:  The name of the partnership firm should be provided. This is the official name the business operates and is recognized legally.
  • Nature of Business: The nature of business refers to the type or category of activities that the partnership firm is engaged in. It describes the primary area of operation or the sector in which the firm operates.
  • Proof of Registered Office Address:  Rent Agreement, NOC from Owner, and Utility bills like Electricity, Water, Telephone, and the Gas bill should not be older than 2 months
  • Partnership Deed:  A written agreement that outlines the terms and conditions of the partnership, including the rights, duties, and responsibilities of each partner.
  • Other Information:
  • Capital Contribution: The capital contribution represents the monetary or asset-based investment made by each partner into the firm.
  • Partners’ Profit/Loss Sharing Ratio: The profit/loss sharing ratio determines how the profits or losses of the partnership firm are distributed among the partners based on their agreed-upon terms.
  • Partner Remuneration: Partner remuneration refers to the compensation or salary paid to partners for their services or involvement in the partnership firm’s operations.

Note: Unregistered Partnership Firms lack legal recognition, and partners may face potential risks and limited legal remedies in case of disputes or liabilities.

2. Registered Partnership Firm

In India, a registered partnership firm is a form of business entity that is created by registering the partnership under the Indian Partnership Act, 1932. It is formed when two or more individuals come together to carry on a business with the objective of sharing profits.

To register a partnership firm, partners must draft a partnership deed, which specifies the terms and conditions of the partnership, such as profit sharing, capital contribution, roles and responsibilities of partners, and other relevant details. The partnership deed is then submitted to the Registrar of Firms along with the required documents and registration fees.

A registered partnership firm holds legal validity and enjoys certain advantages. It provides a legal framework for the partnership, helps in resolving disputes among partners, and allows partners to enforce their rights and obligations. It also facilitates easy transfer of partnership interests and enables the firm to sue or be sued in its own name.

Additionally, a registered partnership firm can avail of certain benefits, such as opening a bank account in the firm’s name, obtaining loans and credit facilities, entering into contracts, and participating in legal proceedings.

required documents & information:

These are the required documentation and information for a Registered Partnership Firm:

  • Documents of Partners:
  • ID Proof of Partners – PAN Card of Partners
  • Address Proof of Partners – Voter’s ID, Passport, Driver’s license, or Aadhar Card of Partners
  • Passport Size Photograph of partners
  • Documents and information for Firm
  • Name of Firm:  The name of the partnership firm should be provided. This is the official name the business operates and is recognized legally. The name should comply with the guidelines and regulations set forth by the Registrar of Firms.
  • Nature of Business: The nature of business refers to the type or category of activities that the partnership firm is engaged in. It describes the primary area of operation or the sector in which the firm operates.
  • Proof of Registered Office Address:  Rent Agreement, NOC from Owner, and Utility bills like Electricity, Water, Telephone, and the Gas bill should not be older than 2 months
  • Partnership Deed:  A written agreement that outlines the terms and conditions of the partnership, including the rights, duties, and responsibilities of each partner.
  • Other Information:
  • Capital Contribution: Partners in a registered partnership firm contribute capital, which can be monetary or in the form of assets, to fund the operations and activities of the firm.
  • Partners’ Profit/Loss Sharing Ratio: The profit/loss sharing ratio outlines the agreed-upon distribution of profits or losses among the partners based on their investment or as per the terms defined in the partnership agreement.
  • Partners’ remuneration: Partner remuneration refers to the compensation or salary paid to partners for their services or involvement in the partnership firm’s operations.
  • Application for Registration:

Forming a registered partnership involves filing an application with the Registrar of Firms of the state in which the firm is situated, along with the required documents and prescribed fees.

Note: Although a Registered Partnership Firm enjoys legal recognition, it is important to comply with statutory obligations, maintain proper records, and ensure adherence to partnership agreements to avoid legal consequences.

3. Limited Liability Partnership (LLP)

In India, a Limited Liability Partnership (LLP) is a legal business structure that combines the features of a partnership and a limited liability company. It is governed by the Limited Liability Partnership Act, 2008. An LLP offers its partners the flexibility of a partnership while providing limited liability protection.

Legally, an LLP is considered a separate legal entity distinct from its partners. This means that the partners’ personal assets are protected from the liabilities of the LLP. The liability of each partner is limited to the extent of their agreed contribution, and they are not personally liable for the debts or obligations of the LLP.

The legality of an LLP is established through its registration with the Ministry of Corporate Affairs (MCA). The registration process involves submitting the necessary documents, such as the LLP agreement, address proof, identity proof of partners, and other relevant information, to the Registrar of LLPs.

Once registered, an LLP obtains a unique identification number and legal recognition. It can then carry out its business activities, enter into contracts, acquire and hold property, and sue or be sued in its own name.

required documents & information:

These are the required documentation and information for a Limited Liability Partnership (LLP):

  • Documents of Partners:
  • ID Proof of Partners –PAN Card of Partners.
  • Address Proof of Partners – Voter’s ID, Passport, Driver’s license, or Aadhar Card of Partners.
  • Residence Proof of Partners – Latest bank statement, telephone bill, mobile bill, electricity bill, or gas bill. Such a bill or statement shouldn’t be more than 2-3 months old.
  • Passport Size Photograph of partners
  • Digital Signature Certificates of Designated Partners
  • Documents of LLP:
  • Name of LLP:  The name of the LLP should be provided. This is the official name the LLP operates and is recognized legally. The name should comply with the guidelines and regulations set forth by the Registrar of Companies.
  • Nature of Business: The nature of business refers to the type or category of activities that the LLP is engaged in. It describes the primary area of operation or the sector in which the LLP operates.
  • Proof of Registered Office Address:  Rent Agreement, NOC from Owner, and Utility bills like Electricity, Water, Telephone, and the Gas bill should not be older than 2 months
  • LLP Agreement: The LLP Agreement is a legally binding document that outlines the rights, duties, and obligations of the partners in a Limited Liability Partnership (LLP). It defines the internal governance structure, profit-sharing arrangements, decision-making processes, and other key aspects of the LLP’s operations.
  • Documents for Foreign Nationals/NRIs, if he/she want to become partner in LLP:
  • ID Proof – Copy of Passport
  • Address Proof – Driving License, Residence Card, or any government-issued identity proof
  • All documents should be apostilled or notarized
  • If the documents are in a other language than English, a notarized or apostilled translation copy is also needed to attach.
  • Other Information:
  • Capital Contribution: Each partner contributes capital, which can be in the form of monetary or non-monetary assets, to establish and operate the LLP.
  • Partners’ Profit/Loss Sharing Ratio: The partners’ profit/loss sharing ratio determines how the profits or losses of the LLP will be distributed among the partners, as agreed upon in the LLP agreement.
  • Partners’ remuneration: Partner remuneration refers to the compensation or salary paid to partners for their services or involvement in the LLP’s operations. The remuneration may be based on a fixed amount, a percentage of profits, or any other agreed-upon arrangement among the partners as defined in the LLP agreement.
  • Contact details of Partners: Personal Mobile number and email id should be provided for each partner.

Note: While LLP provides limited liability protection, failure to comply with statutory requirements, maintain proper records, or act in the best interest of the LLP may expose partners to personal liability under Indian law.

Effortless Business Formation: Vizttax's Comprehensive Support for Partnership Firms and LLPs

Vizttax can assist in various business registration services, including Unregistered Partnership Firms, Registered Partnership Firms, and Limited Liability Partnerships (LLP). By availing Vizttax’s services, you can navigate the complexities of partnership firm and LLP registrations with ease, ensuring a hassle-free and legally compliant process. Here’s how Vizttax can help:

  • Expert Guidance: Vizttax has a team of experienced professionals who can provide expert guidance on the legal requirements, documentation, and registration processes involved in setting up these entities.
  • Documentation Assistance: Vizttax can assist you in preparing the necessary documentation, including partnership deeds, LLP agreements, and other required forms and applications. They ensure that the documents comply with legal standards and fulfill the specific requirements of each service.
  • Compliance Support: Vizttax can help you understand and fulfill the compliance obligations related to each service. They can provide guidance on maintaining proper records, filing annual returns, conducting audits, and adhering to other legal obligations to ensure the smooth functioning of your partnership or LLP.
  • Name Reservation and Registration: Vizttax can help you with the process of reserving a unique name for your partnership or LLP and registering it with the relevant authorities. They ensure that the proposed names comply with the naming guidelines and assist in filing the necessary applications and forms.
  • Timely Updates: Vizttax keeps you updated on any changes in the regulatory framework or compliance requirements related to partnership firms and LLPs. They ensure that you stay informed and compliant with the evolving legal landscape.

Note: The specific services offered by Vizttax may vary, and it is recommended to contact them directly for detailed information on their offerings and expertise in these areas.

Frequently Asked Questions:

Vizttax offers comprehensive partnership services, including the establishment of unregistered partnership firms, registered partnership firms, and Limited Liability Partnerships (LLPs).

Our team will guide you through the process, which typically involves drafting a partnership agreement, defining the rights and responsibilities of partners, and ensuring compliance with legal requirements.

We will help you navigate the registration process, complete necessary paperwork, and fulfill formalities to establish a registered partnership firm in accordance with the applicable laws and regulations.

Yes, we can provide guidance on the conversion process, ensuring compliance with legal procedures and helping you transition your existing partnership structure into an LLP or a registered partnership firm.

Yes, we provide comprehensive tax support, including handling tax registrations, advising on tax compliance obligations, and assisting with tax planning strategies specific to partnership structures.

We stay up to date with the latest legal and regulatory changes related to partnerships, ensuring that you remain compliant with filing obligations, annual reporting requirements, and any updates that may impact your partnership structure.

Yes, in addition to partnership establishment and compliance, we offer a range of related services, including accounting, bookkeeping, financial advisory, and business consulting, tailored to the specific needs of partnership firms.

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