Welcome to TRUSTLINK INDIA
Partnership Firm Formation
Most common business formation in India
Partnership Firm – Overview
A Partnership Firm is a very common form of business in India. A Partnership firm is a suitable form of business especially for micro, small or medium type of businesses, where requirements of fund raising are very less. The Indian Partnership Act 1932, governs and regulates the partnership firms in India.
A Partnership Firm is formed under a contract between two or more partners, which is called the partnership deed. In a Partnership Firm, the partnership deed regulates the relationship among the partners and also between the partners and Partnership Firm.
Major Advantages of a Partnership Firm in India
Partnership firms offer several benefits making them highly suitable for small and medium businesses. Here are the major advantages:
Easy to Start
Partnership Firms are easy to set up; the only requirement in most cases is a partnership deed. Apart from the partnership deed, no other documents are required. Registration of a Partnership Firm with the Registrar of Firms at a later date is voluntary, but not mandatory.
Quick Decision Making
Decision making in a Partnership Firm is faster as there is no concept of passing of resolution like in other entities. Partners of a Partnership Firm enjoy a range of powers to undertake any business on behalf of the partners consent.
Less Compliance
A Partnership Firm has very little compliance to adhere to as compared to Company or LLP. Introduction of any changes can be done easily. It is very cost-effective and its registration process is cheaper. Also, the dissolution is easy and doesn't require many legal formalities.
Sense of Ownership
Partners have the liberty to manage and control the firm’s activities. The partners share the profits or losses of the firm as per the ratio decided by them mutually on partnership deed. Thus, they are liable jointly or severally for the activities of the firm.
Registered and Unregistered Partnership Firms
A Partnership Firm can be classified into two types – Registered and Unregistered Partnership Firm. As per Indian Partnership Act, the only criterion to commence the business as a partnership firm is a finalization and partnership deed’s execution between the partners. Thus, it is not mandatory for a Partnership Firm to be registered, but unregistered Partnership Firms have been denied some rights and benefits.
Benefits of Registering a Partnership Firm:
- A partner can sue against any partner or the firm for enforcing his/her rights arising from a contract.
- A registered partnership firm can file a suit against any third party for enforcing rights.
- A registered firm can claim set-off or other proceedings to enforce rights.
Disadvantages of a Partnership Firm
While there are numerous benefits, it's also important to consider the limitations before forming a Partnership Firm:
Unlimited Liability
The biggest disadvantage is unlimited liability of partners. Partners may need to pay business debts from personal assets. Liability created by one partner is borne by all.
No Perpetual Succession
A Partnership Firm ends upon death or insolvency of partners. It can dissolve anytime, meaning its continued existence is never guaranteed.
Limitations of Resources
The restricted number of partners limits the amount of capital that can be raised and severely impacts the scalability potential of the business.
Limitations on Fund Raising
Due to the lack of a separate legal entity and continuity, raising external capital from investors or getting large bank loans is significantly more difficult.
Documents Required for a Partnership Firm Formation
Documentation is simple and requires only basic details and proofs to begin the drafting and registration process.
Details for Partnership Deed
- Name and address of the proposed firm
- Name and address of all partners (with proof)
- Nature of business & Date of commencement
- Capital contribution by each partner
- Profit & loss sharing ratio
- Bank account operation authority
- Salaries/commissions payable to partners
- Duties and obligations of partners
- Any additional clauses
Documents for Registration
- Application of registration
- Certified copy of partnership deed
- Declaration by partners
- PAN card & address proof of partners
- Proof of principal place of business
Partnership Firm Package
We provide a comprehensive package to get your Partnership Firm completely ready for operations:
- Preparation of Partnership Deed
- PAN for the Partnership Firm
- TAN of the Firm
- Bank Resolution for Account Opening
- Free 1 year web hosting with SSL
What Our Customers Say
“Best experience!!! Hassle-free service with top quality supervision. Highly recommended.”
“Great experience working with them… amazing service ❤️”
“Very good service with affordable price. Trustworthy organisation.”
“Excellent team and outstanding service delivery”
“Very trustworthy and fast service at reasonable cost”
“Very responsible and cooperative”
“Customer service, behavior & nominal fee – really happy”
“Strong relationship built over years, NGO maintained by them”