Partnership is a common form of business. Two or more people come together to carry on a business and share the profits and losses. Liability of the partners in a partnership firm is joint and several.
More about partnership
A partnership firm is easy to form. An oral or written agreement between the partners is all that is needed to start a partnership.
More resources can be procured from all the partners when compared to sole proprietorship.
Better management of business can be done as the number of persons managing the business are more.
Risk is shared amongst the partners.
The statement of accounts of the firm need not be published and this ensures secrecy.
A partnership firm cannot invite funds from public.
Limited liability concept does not apply in case of a partnership firm. All the partners are jointly and severally liable for the liabilities of the firm.
A partnership firm does not exist for an indefinite period of time. The death, insolvency or lunacy of a partner may lead to dissolution of the partnership firm.
A partnership firm does not have a separate legal status i.e., a firm cannot own property.
Due to the limited number of partners there is flexibility in the operations of business as the partners can amend any objectives or change any operations any time by mutual consent.
Procedure for registration
A minimum of 2 persons are required to form a partnership. Maximum of 20 persons are allowed in a partnership concern. Maximum partners would be 10 in case of partnership carrying on banking business.
A partner must be an Indian citizen and resident of India.
ID proof, Residence proof and PAN card of all the partners along with a Partnership deed signed by all the partners.
There is no minimum capital required to start a partnership firm. A partnership firm can be started with any amount of capital.
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. A Registered Partnership firm can claim a set off or other proceedings in a dispute with a third party.
To open a bank account for a Partnership firm, a registered Partnership deed along with identity and address proof of the Partners should be provided.
A partnership deed is a written agreement entered into by all the partners of the firm which specifies the terms under which partnership is to be carried on.
A partner cannot transfer his interest in partnership to an outsider without the consent of all other partners.
Tax audit under Income Tax Act is required for only few assessees.
Yes. A sole proprietorship concern can be converted into LLP or Company by following procedures laid down in respective Acts.
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