Initiating a business is not a one-man-army story as having a team or someone to assist you to grow through the challenging times of the business is a great deal. Opting for partnership deed registration online is one of the most preferred form of business formulation to leverage compliance in conducting business
A partnership firm is known as a form of business that is formulated by two or more people who agree on sharing their business P&Ls in the predetermined ratio, whatsoever be the case. The LLP (limited liability partnership) is the preferred form of business to date. While the LLP was brought into place in 2010, the partnership act dates back to 1932, providing evidence that the partnership businesses are the most preferred and trusted ones. Having a partner is not restricted to anyone.
They even can be family, friends, colleagues or just some strangers with common interests, motives and trust. The significant advantage of a partnership firm is its easy compliance and straightforward formation.
Types of partnership firms
To begin a business in the partnership business, the only condition is to set up and finalize a partnership deed under the Indian partnership act, 1932.
You will find the two types of partnership firms;
– Registered partnership firm.
– Unregistered partnership firm.
It is neither compulsory to register the firm to begin a business nor any penalty for no-registration that you would be obliged to pay. It is merely a choice of business owners and partners. The firm can be registered once it is formulated. The only disadvantage of the unregistered firm is that it will not get the benefits and rights provided under section 69 of the partnership act.
Nonetheless, it is always suggested to register the firm sooner or later to legalize it and get benefits of various rights provided by the said act.
Defining partnership deed and how it can be formulated?
A partnership deed is a type of contract that lays down and specifies all the duties, rights, and other formalities concerning the firms and the partners.
The details that you must mention in the partnership deed are given below;
– Partners’ names.
– Business’s name and its type, along with capital contributions made by each partner.
– P&L ratio among the partners.
– Each partner’s rights and duties.
– The processes that we must follow and the rules for working of the firm.
– Partners themselves determine if any other information to be included or not.
Registration of a partnership firm and the required documents
The partnership-based startup registration process is a relatively straightforward one which can be helped by hiring business professional services. Its registration will take place under section 58 of the Indian partnership act. The process includes the filing of the application forms and fees to the registrar of firms of the specific state, relying on the firm’s location.
All the partners are obliged to sign the application form and offer their consent.
Once all the provisions provided under section 58 are met by the registrar of firms, and if he/she is satisfied, the firm will be recorded in the entry of statements. Further, the registration certificate will be issued in the name of the given firm. It is crucial that firm should apply for income tax department and registrar of firms. Besides this, the firm must have its PAN card. Such that the further creating a bank account, processes and transactions are made will be the same.
Along with the application form, one is obliged to file several documents as given below;
- Established partnership deed’s copy.
- Registration form.
- Documents for ID proof and address proof of the partners should include the following;
– Driving license.
– Aadhar card.
– PAN card.
– Voter ID.
4. Property’s proof, if owned or rented.
- Water bill or electricity bill’s receipt.
Now, let’s look into partnership firm’s pros and cons.
Pros of the partnership firm
The incorporation and compliance are straightforward and making it feasible for everyone to formulate their business as a partnership firm. These are much better than the LLP or other firms as they do not require any submission of returns or taxes, neither monthly nor yearly. It makes all the financial statements of the firm private.
Cons of the partnership firm
The partnership firms are restricted to a certain level. If the venture capitalists, investors, and another approach, then the firms will hold back. Their operation is not transparent compared to other firms and businesses registered in other ways.
Having a partnership firm is an excellent way to formulate business and selecting the type of firm relying on what the individuals and partners expect from their business and firm. Read the latest trending article at thewiremagazine.com.