India's popular business structure for small businesses with multiple owners
Partners share management duties and financial burdens
Workload and decision-making is distributed among partners
Multiple partners can contribute to business capital
Easier to raise funds compared to sole proprietorship
Easy to establish with minimal legal formalities
No complex registration process like companies
Taxed as individual income of partners
No dividend distribution tax unlike companies
Prepare the partnership agreement containing all terms and conditions between partners
The deed should include:
All partners must sign the deed on stamp paper of appropriate value
Key points:
Obtain Permanent Account Number for the partnership firm
Requirements:
Open a current account in the name of the partnership firm
Documents needed:
Register with Registrar of Firms (optional in most states)
Registration benefits:
No, registration of a partnership firm is not mandatory in India. A partnership firm can be formed simply by creating a partnership deed and starting business operations. However, registration provides certain legal benefits like the ability to file suits in court.
A partnership firm must have at least 2 partners. The maximum number of partners is 50 for general businesses and 10 for banking businesses, as per the Companies Act.
A partnership firm is taxed at 30% flat rate plus surcharge and cess on its total income. Additionally, partners are taxed on their share of profits at their individual income tax rates (though they get credit for tax paid by firm).
Yes, a partnership firm can own property in its own name. The property will be treated as an asset of the firm and not of individual partners.
In a general partnership, all partners have unlimited liability, meaning their personal assets can be used to settle firm debts. In limited partnerships, only general partners have unlimited liability.
An individual can set up as a sole trader/proprietor, as a Partnership firm, or Limited Liability Partnership etc.
"The team helped us draft a comprehensive partnership deed that covered all possible scenarios. Their expertise saved us from potential disputes later."
"Their guidance on partnership taxation and compliance helped us save significant money in our first year of operations."
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