The partnership is the simplest form of business for more than one owner. You can start functioning as a partnership firm within the same day.
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A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. A partnership is easy to form since no complex business formalities are required to be fulfilled.
Incorporating your business is the one step in helping it become a legal entity in India. Doing so not only provides a slew of benefits, but it also ensures that you stay protected from legal hassles later on. Moreover, the most crucial step in incorporating your business is understanding which business structure to register as.
Partnership registration is not compulsory and in at the discretion of the partners whether they want to register the partnership firm or not. But a partnership firm cannot avail legal benefits if it is not registered, hence it is always advisable to register it. Documents required for partnership formation (whether registered or not) are mentioned below.
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The process starts with documentation of the partners and the Principal Place of Business, where the firm shall be operating its business in India. Ensure that the documents are updated and correct. We shall also require information for NOC & Partnership Formation.
While keeping the Partnership Firm's name, you should thoroughly check the name of existing business or trademarks. To check the name of an existing company or LLP, you may visit mca.gov.in, and for checking the trademark, the database visits mca.gov.in Download the Registrar of Trademarks' website.
The Partnership Agreement or the Deed is the constitution of the firm and is the primary document. The Deed of the Partnership must contain necessary covenants that determine the partners' mutual rights and obligations among themselves. This document also specifies the capital and profit-sharing ratio and how the partners shall operate the firm. Our team of lawyers help startups in the drafting of the partnership deed.
After the draft partnership agreement is approved and adopted by the partner's appropriate stamp duty, on the partnership deed has to be paid. The stamp duty/paper varies from state to state and depends on the firm's capital. Finally, the partners signed the partnership deed in the presence of two witnesses, and after that, the deed should be notarised by presenting the same before a notary public.
The application for allotment of Pan Number and Issue of the Partnership Firm's Pan Card is made in Form No 49A. The TDS Number (TAN) of the firm is applied in Form No 49B, which is necessary to comply with the TDS Provisions.
The GST is a tax on supply of goods or services and to comply with the GST Law provisions, the firm may need to get registered with the GST. Please refer to our dedicated webpage on GST Registration Download NOC Format to know the threshold limit as may be applicable for seeking the GST Registration
Though registration of partnership firms is not mandatory under The Partnership Act, 1932, Section 69 of the act specifies the effect of Non-Registration. According to that, an unregistered firm shall not be able to recover any sum more than Rs. 100. Hence, for all practical purposes, the partnership firm's registration with the Registrar of Firms is strongly recommended.
Ans: To start a partnership firm, the minimum number of partners is two, whereas the maximum number of partners can be 20. The partners must come together to carry on any legal business with the motive of earning profits.
Ans: The partnership business is regulated under Indian Partnership Act, 1932. Which prescribes possibility of two types of the firm, unregistered firm, and registered firm. An unregistered firm is formed by entering into an agreement between two competent persons, known as partners, where the firm is not registered with the registrar of firms. Whereas the firms which subsequently get registered with the registrar of firms by submitting the copy of partnership deed and KYC of partners and the registered office is known as the Registered Partnership Firm.
Ans: The application for registration of partnership firm is filed with the Registrar of Firms having jurisdiction over the place of business of the partnership firm. The registrar of firms after receipt of the application complete in all aspects with all required documents registers the firm within 1-2 weeks and issues the Certificate of Registration of Firm.
Ans: The PAN is a ten-digit alphanumeric number allotted by the Income Tax Department, the application for pan card is filed in Form No 49A. The TAN is a number allotted for TDS Compliance, the application for TAN is filed in Form No 49B. Normally it takes around 6-10 days in PAN allotment and Pan Card Delivery.
Ans: Unlike Limited Company or LLP, there is no need to file the annual return for a partnership firm. However, income Tax Return shall be necessary to be submitted at the end of the financial year and within Due Date of filing. There is no provision of audit under the partnership, Act hence a firm does not require to get its books audited. However, if the turnover crosses 2 Crore, then tax audit is mandatory.