What is Partnership Firm
A Partnership Firm, also known as a General Partnership (GP) Firm, is the business entity which has many partners or owners with unlimited liability, who share its profits/losses as per the provisions given in the Partnership Deed. Owing to some limitations and risks, this form of a firm is not very popular in India and other countries in recent times. However, there are present these general partnership (GP) firms for doing medium-sized businesses where capital involvement is limited in amount; these include retail and wholesale trading companies, small scale industries, real estate brokering companies, transport agencies, and small professional firms like doctor's clinic, law firm, chartered accountancy firm, etc.
In ours this elaborately prepared webpage, we are exclusively providing detailed information about the general partnership (GP) firm in India, and all requirements and procedures for staring business by such a business entity.
In India, the partnership firms are formed, registered, governed, and regulated by the Indian Partnership Act of 1932. The following are salient features of partnership firms in India:
- A partnership firm has no separate legal entity, other than that of its partners or owners
- The least number of partners must be two; and the upper limit to this number is 10 in case of banking business; and 20, in cases of all other types of businesses
- Partners have unlimited liability and joint responsibility, with specific rights and duties
- Administration and management of business activities are made as per the Partnership deed
- The life of partnership firm is limited, and not perpetual; and is inevitably subject to retirement, lunacy, bankruptcy, or death of any vital partner
Steps for Starting a Partnership FirmThe following are the main and most important steps for starting a partnership firm, anywhere in India:
- Selection of two or more suitable partners, and an appropriate business name
- Preparation of an elegant Partnership Deed. This partnership deed is vital and most significant document regarding the existence and upkeep of such a partnership, carrying out of all business activities properly, efficiently, and responsibly.
- Registration of the partnership firm. Registration of a general partnership (GP) firm is not essential, however, its proper registration offers certain legal benefits. The Registrar of Firms in the concerned region is entitled to register a partnership firm, as per the rules, regulations, and provisions given in the Sections 58 and 59 of the Indian Partnership Act of 1932. The requisite documents for registration are --- all detailed about the place and nature of the business, and its partners; completed Form No.-1; perfectly filled Specimen of Affidavit; certified true copy of the Partnership Deed; proof of ownership to the place of business, or rental agreement; and prescribed registration fees.
- Making PAN Card for the partnership firm
- Opening a Bank Account for the firm
- Acquiring all mandatory licenses for business conduction
- VAT and other tax related registrations