Key Information

A Partnership Firm is a business structure where two or more individuals come together to operate and manage a business with the goal of earning profits. The firm is governed by a partnership agreement that outlines the roles, responsibilities, and profit-sharing among partners.

Key Features of a Partnership Firm

• Number of Partners: Minimum of 2 partners; maximum of 20 for most businesses (10 for banking).

• Liability: Partners have unlimited liability, meaning their personal assets are at risk if the business incurs debt.

• Profit Sharing: Profits are shared according to the agreement, typically based on the capital contributed or as decided among partners.

• Management: All partners actively manage the business unless otherwise stated in the agreement.

• Simple Structure: Easy to set up with minimal formalities compared to companies or LLPs.

• No Separate Legal Entity: The partnership does not have a separate legal identity from its partners.

Documents Required for Partnership Firm Registration

1. Partnership Deed: A written agreement detailing the terms and conditions of the partnership.

2. Identity Proof: PAN, Aadhaar, Passport of all partners.

3. Address Proof: Utility bill, bank statement, or Aadhaar card of the partners.

4. Registered Office Proof: Utility bill or property documents (if the office is rented, include a NOC).

Steps to Register a Partnership Firm

1. Limited Liability: Protects personal assets; partners are liable only to the extent of their contribution.

2. Separate Legal Entity: LLP can own property, enter contracts, and continue operations despite partner changes.

3. Low Compliance: Minimal audit requirements and reduced regulatory filings compared to companies.

4. Tax Benefits: Avoids double taxation; no Dividend Distribution Tax (DDT).

5. Flexible Structure: Easy management and no restrictions on the number of partners.