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Partnership


In the Partnership Firm form of doing business in India, two or more persons comes together to do business jointly.

Key Features of Partnership Firm

Partnership Firms in India are governed by the Indian Partnership Act, 1932. They jointly own, manage and control their partnership business. Partners share responsibilities and duties of the business. Partnerships are guided by terms and conditions of Partnership deed.


Partnership Deed

Partnership Firm is formed by entering into written agreement between partners called ‘Partnership Deed’. Partnership deed forms the basis of partnership. It includes all important clauses like name of business, contribution of capital, sharing of profits, mode of management, etc. “Partnership deed is a document containing all the matters according to which mutual rights, duties and liabilities of the partners in the conduct and management of the affairs of the firm are determined.” The deed must be signed by the partners. .

Registration of Partnership Firm

Registration of Partnership Firm is optional and is entirely at the discretion of the partners. Registered Partnership Firm enjoys various benefits over the un-registered one. For Example, Only a registered Partnership firm can file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act. Hence, it is always advisable to register the firm with the respective Registrar of Firms. Firm can be registered any time during the life of the Partnership Firm

Advantages of a Partnership Firm

Ease of Start up

It is not mandatory to register the partnership deed. One can start business once partners sign partnership deed. Hence, it is easy to start. Proprietor can choose any name for the business. There is no mandatory capital requirement to start partnership. Further, limited legal compliances make it less expensive to run.

Different set of skills and ideas

Since more than one person works for the business, they carry different set of skills and ideas for business.

Better funds availability than Proprietorship

More partners bring more funds for the business in the form capital.

Minimum Annual Compliances

No mandatory annual return filings as required for Companies/LLP .

Possible Tax Benefits

Partnership firm can take benefits of various provision of Income Tax Act like deduction of expenses like remuneration and interest to partners.

Audit not compulsory

No statutory audit is required similar to Companies. Audit is required only if turnover exceeds particular limit as per Income Tax Act.

Disadvantages of Partnership


Unlimited Liability

Difficult to scale up

Steps in Formation of Partnership Firm

Make choice of Partnership Firm Name

Create Partnership Deed with all relevant clauses with our professional help.

Register Partnership Firm with the Registrar of Firms.

Apply for PAN Card & TAN for the Partnership Firm.

Opening of Current Bank Account on the basis of PAN Card and Registered Partnership Deed. 

Annual Compliance for Partnership Firm

No mandatory annual returns are specified for Sole Proprietorships as they are required for Companies.


Mandatory Annual Returns

No mandatory annual returns are specified for Sole Proprietorships as they are required for Companies.

Income Tax Return

If the taxable income of the business activity exceeds basic exemption limit, then Income Tax Return for the business is required to be filed under the Income Tax Act, 1961. If there are carried forward losses, then it is advisable to file Income Tax Return within the due date specified in the Act.Read More

Income Tax Audit

In case the turnover/receipts exceed the specified limit, then Audit may be required to be conducted under provisions of the Income Tax Act, 1961.

TDS Returns

If TAN is required to be taken for the business, then returns are required to be filed under provisions of the Income Tax Act, 1961.
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State VAT Returns

If registration is taken under State VAT Act, then specified returns are required to be filed as per the frequency as applicable to the business. Under Maharashtra VAT Act, the frequency of filing business returns could be monthly, quarterly or Half-yearly.
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Service Tax

In case the Proprietorship business is in providing service and Service tax registration is taken, then Service Tax returns are required to be filed once in six-months.
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How can we help you in starting up Partnership Firms?


We help you in understanding basic structure of Partnership business. We help you in drafting the Partnership Deed by understanding various clauses of the Deed. We help you register the Deed with respective Registrar of Firms. We also help you in obtaining mandatory registrations under various Acts depending on the activity of the business.

Partnership Firms can be used for undertaking Manufacturing Activity.

We help you obtain MSME Registration.
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Partnership Firms can be used for undertaking Trading Activity.

We help you obtain State VAT Registration.
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Partnership Firms can be used for providing Services.

We help you obtain Service Tax Registration.
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Partnership Firms can secure its Brand Name or Trade name by registering the same.

We help you register Trademark®™.
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Comparison Chart

Comparison chart for choosing Business Organization Form

  Partnership Firm     
  • Family Business
  • Least Time
  • No
  • No
  • Minimal
  • Difficult
Sole Proprietorship  
  • Small trader or Manufacturer
  • Least Time
  • No
  • No
  • Minimal
  • Difficult
Limited Liability Partnership
  • Professional Service Providers
  • Moderate Time
  • Yes
  • Yes
  • Less
  • Difficult
Private Limited Company
  • Start up or Growing Companies
  • Moderate Time
  • Yes
  • Yes
  • High
  • Easy

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