Partnership Firm Registration step by step guide with pan

Partnership firm registration step by step guide now

Partnership firm registration step by step guide :- A partnership firm is a business structure where two or more individuals come together to collaborate on a business venture. It offers several benefits that make it an attractive choice for entrepreneurs.

A Partnership Firm refers to an entity formed by two or more people who mutually agree to divide profits / loss in a predetermined ratio. The partnership deed is a legal document used to establish the Partnership Firm Registration. According to law, a partnership is an agreement between individuals who have consented to divide profits earned from the business operation performed within the partnership firm. A partnership firm can have a maximum of 50 members. It is crucial to note that members of a Hindu Undivided Family or a Burmese Buddhist member cannot be part of a partnership firm. Read more about Partnership Firm Rule and Regulation at The Partnership Act, 1932

Exploring Partnership Firms

A partnership firm is a business structure where two or more individuals come together to collaborate on a business venture. It offers several benefits that make it an attractive choice for entrepreneurs.

Key Characteristics of a Partnership Firm

  • Number of Partners: A partnership can have a minimum of two members and a maximum of 50.

  • Voluntary Registration: While registration is not mandatory, it offers additional benefits and legal protection.

  • Contractual Agreement: Partnerships operate based on a partnership deed, a legally binding contract that outlines various aspects of the partnership.

  • Competent Partners: All partners must be competent adults; minors cannot become partners.

  • Profit and Loss Sharing: Profits and losses are distributed as defined in the partnership deed.

  • Unlimited Liability: Partners have joint and several liability for the firm’s debts.

  • Interest Transfer: Partners cannot transfer their interest without approval from other partners.

  • Principal-Agent Relationship: Partners act as agents and are expected to act in the firm’s best interest.

Documents Required for Partnership Firm Registration

  • Photos, Aadhar, and PAN of all partners
  • Address of the proposed firm
  • Form No. 1 (Application for registration under the Partnership Act)
  • Original signed Partnership Deed
  • Affidavit declaring the intention to become a partner

Types of Partners

  • Active Partner: Actively manages the business and represents other partners.

  • Dormant Partner: Not actively involved in management but shares profits and losses.

  • Principal Partner: Not actively involved or an equity owner but liable for business actions.

  • Profit-Share Partner: Entitled to profits but not liable for losses.

  • Sub-Partner: Shares profits with a third party, without rights or liabilities.

  • Prospective Partner: Accepted as a partner with no prior liability.

  • Previous Partner: Leaves the partnership but remains accountable for past actions.

  • Partner by Holding Out: Represents themselves as a partner, liable to those who trusted the representation.

Advantages of Partnership Firm Registration

  • Minimal Compliance: Fewer legal and regulatory obligations compared to other business structures.

  • Simple Formation: Quick and straightforward registration process.

  • Cost-Effective: Lower initial costs, ideal for startups.

Tax Compliance After Partnership Firm Registration

  • Obtain PANs and TANs for partners.
  • Mandatory ITR filing for registered partnership firms.
  • Pay 30% tax plus cess and surcharge on total income.
  • Tax audit for firms with annual income over 100 lakhs.
  • GST registration for firms with income over 40 lakhs (20 lakhs in northeastern states).
  • GST and TDS return filing.
  • ESIC registration and returns for eligible firms.

Partnership Firm vs. Company

Criteria
Partnership Firm
Company
Legal StatusUnincorporatedIncorporated
Number of OwnersTwo or moreOne or more
LiabilityPartners have unlimited liabilityShareholders have limited liability
ManagementManaged by partnersManaged by directors appointed by shareholders
OwnershipJoint ownership by partnersIndividual ownership of shares by shareholders
Raising CapitalLimited optionsCan issue shares and raise capital from the public
Legal ComplianceGoverned by Partnership Act, 1932 with fewer formalitiesGoverned by Companies Act, 2013 with more formalities
TaxationPartners pay tax on their share of partnership incomeCompany taxed as a separate legal entity, shareholders taxed on dividends
ContinuityPartnership dissolves on the death or resignation of a partnerCompany has continuity of existence
Transferability of OwnershipOwnership cannot be transferred without the consent of partnersShares can be freely bought and sold
ReportingNo mandatory reporting requirementsMust maintain books, file annual returns, and financial statements

BASIC PACKAGE

3-5 Days
1999
  • Partnership Deed
  • PAN of firm
  • Current account assistance

STANDARD PACKAGE

3-5 Days
2999
  • Partnership Deed
  • PAN of firm
  • Current account Assistance
  • GST registration
  • MSME registration

PREMIUM PACKAGE

10 Days
8999
  • Partnership Deed
  • PAN of firm
  • Current account Assistance
  • GST registration
  • Website development
Premium

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