A partnership is an association of two or more individual who agree to carry on a business together for the purpose of sharing profits. To start a Partnership firm, partners need to enter into an agreement which is popularly known as Partnership Deed. Different states impose different stamp duty on the partnership agreements/deeds, it means while creating a partnership instrument (Deed) the partners must purchase stamp paper of appropriate value as may be applicable in the respective state, to be annexed with the agreement. An agreement can further be notarized. In India, Partnerships are widely prevalent because of its ease of formation and minimal regulatory compliance.
Minimum two person is needed to become partners of the firm. Foreign investment in a partnership firm is not permitted.
The minimum number of persons required to form a partnership firm of business is 2. However, maximum 20 partners are allowed in a firm (10 in banking business).
Foreign investment is not allowed in Partnership firm only Indian citizen become the partner and can start the partnership firm.
There is no requirement to introduce the minimum capital in case of partnership firm. It must be based on the business requirements. The Stamp Duty on the deed is based on the capital of the firm.
Name of the firm should be unique, and it must not same or similar to the name of any existing trademark which is registered or applied.
First documentation process of the partners and the place of business where the firm shall be operating its business in India. Ensure that all the documents should be updated and correct.
Choose a name that is unique and represents your business to the public. The name of the partnership firm should be cross-checked with the trademark registry to avoid any infringement of someone else Trademark or brand name. The selection of a proper name should be starting point, we search the proposed name of the firm in the trademark register to avoid any infringement on someone else's trademark.
The partnership deed describes your business and lists the rights and duties of each of the partners in your partnership firm. This document also specifies the capital and profit sharing ratio and how the firm shall be operated by the partners.
Complete the registration process by final submission of the application along with the payment of prescribed fees and stamp duty for partnership registration. Fees and stamp duty depends upon the state in which the firm is registered .
At last the partnership deed is signed by the partners in the presence of two witnesses and after that the deed should be notarized by presenting the same before a notary public.
Partnership firm needs to make an application in the prescribed Form 49A to the income tax department for the allotment of PAN, The acknowledgment of pan application for the partnership is received within the same day. However, the pan is allotted within a week. TAN number is a permanent number assigned to business for complying with the provisions of withholding tax (TDS). You are required to deduct TDS while making payments; hence, the next step is to obtain a TAN number, which is mandatory to submit TDS Returns.
There can be a maximum of 10 partners in case of banking partnership firms and a maximum of 20 partners for all the other types of partnership firms.
The Partnership Act, 1932 does not mandate registration of Partnership Firm. But it is advisable to get your firm registered.
Registration process will change from state to state. Hence, you will have to confirm the registration process with the Registrar of Firm's office situated near your business location.
Yes, a Partnership Firm or a Company can be a partner in a Partnership firm.
As per the Partnership Act 1932, a minor cannot become a partner. But, with the consent of all the partners of the firm, and through an agreement executed between the minor's guardian and other partners, the minor can be admitted to the benefits of the partnership firm.
The partnership business is regulated under Indian Partnership Act, 1932. Which prescribes possibility of two types of the firm, unregistered firm, and registered firm. An unregistered firm is formed by entering into an agreement between two competent persons, known as partners, where the firm is not registered with the registrar of firms. Whereas the firms which subsequently get registered with the registrar of firms by submitting the copy of partnership deed and KYC of partners and the registered office is known as the Registered Partnership Firm.
The PAN is a ten-digit alphanumeric number allotted by the Income Tax Department, the application for pan card is filed in Form No 49 A. The TAN is a number allotted for TDS Compliance, the application for TAN is filed in Form No 49B. Normally it takes around 6-10 days in PAN allotment and Pan Card Delivery.
Unlike Limited Company or LLP, there is no need to file the annual return for a partnership firm. However, income Tax Return shall be necessary to be submitted at the end of the financial year and within Due Date of filing. There is no provision of audit under the partnership, Act hence a firm does not require to get its books audited. However, if the turnover crosses 2 Crore, then tax audit is mandatory.
Yes, a partnership firm can be converted easily into a Limited Liability Partnership or a Private Limited Company. The partnership is an old method of doing business; we always recommend to start a business in the Private Limited form.
The stamp duty on the partnership deed varies from state to state, and within one state it further varies based on the capital of the firm. You must correctly consider the applicable stamp duty on the partnership deed. The notary of the deed is an essential requirement for partnership registration.