Partnership is an association of two or more persons to carry on a business in the capacity of co-owners. Each such person is called a partner. All the partners share the profits and losses in proportion of their respective ownership, or as agreed between them.
Like Proprietorship firm, the Partnership also does not possess any individual legal entity on its own and therefore the liability of all partners in this case is unlimited. Likewise, all the partners are liable for any wrongdoing in the partnership firm without particular reference to individual partners.
How to Form a Partnership Firm – Documents Required
- PAN Card of the Proposed Partners along with their Address Proof
- Selection of Name of Partnership
- Address Proof for Proposed Place of Business
- Partnership Deed
- Registration of Partnership (Not Compulsory)
- PAN Card of Partnership Firm
- Statutory Registration e.g. MSME/GST/TAN etc.
- Open a Current Account in the name of the firm
- Easy to start as its registration of Partnership is not compulsorily.
- Statutory Compliances are relatively lesser in case of Partnership Firm as compared to Body Corporate
- Exemption from maintaining Books of Account in case of Income declaration under Presumptive Income Basis up to Rs. 2 Crores
- Exemption from Audit up to Rs. 50 Lacs in case of service organization and Rs. 100 Lacs in case of others or Income Declaration under Presumptive Basis.
- Relatively Lower Cost of Operation
- Easy to wind up the operations, if required.
- 1. Relatively Difficult in accessing the External Finance in the form of Debt and Equity as compared to Body Corporate
- 2. The Liability of Partners for the operations of the firm is joint and several extending to personal assets also.
Best Fit for:
- Generally for new Start-Up Ventures looking to start the operations jointly with other persons with a common mind and objective.
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