Starting a busness as a partnership firm is very old and widely popular among small businesses. A partnership firm can be started by 2 or more individuals planning to conduct business operations together.
For forming partnership firm, one has to execute partnership deed between the partners. Deed contains the details of Business to be conducted, Name of the Firm, Capital contribution, Profit Sharing ratio, Mode of Operation of bank account, Business Address and other terms and conditions.
A partnership firm is to be registered under Partnership Act 1932. However, registration of a partnership firm isn't compulsory, but it is advisable to register a firm as un-registered partnership firm can not file a suit against a third party.
Why choose a Partnership Firm?
Sharing of Risks
A Partnership firm enables to split the burden of deficiency and any other losses. Thus the risk of loss is divided among partners.
Ease of Setup
Starting a partnership firm is very simple. One has to draft a partnership deed and execute it.
A partnership firm isn't required to file any returns or reports except Income Tax Return. Thus, it has lesser compliance compared to LLP and Company.
No Compulsion on registration
Unlike company and LLP, a partnership firm isn't mandatorily required to be registered. However we suggest to register the firm as un-registered firm can not sue third party on its own name
Pooling of Resources
Partnership firm enables to fetch financial, intellectual, expertise, and other resources. Thus, a task can be easily delegated among partners.
The addition or removal of any partners, or change any terms in a partnership deed is very simple, and there aren't any complex formalities to be fulfilled.
Process for Registering Partnership
Choose a Name
Choosing right name is always a task for any business, name and style of business is to be decided
Partnership deed is to be drafted, specifying the terms and conditions as agreed among partners
A final deed is to be executed among agreed partners and should be notarized.
Registering with ROF
FORM-A shall be duly filled and submitted for registering Firm with ROF
Applying for PAN and TAN for a firm
Open a bank account in the name of Firm with agreed bankers.