WHAT IS A PARTNERSHIP FIRM? DO YOU KNOW HOW IT IS REGISTERED AND WHAT ARE ITS BENEFIT? HOW MANY MEMBERS ARE THERE FOR PARTNERSHIP FIRM?
WHAT
IS A PARTNERSHIP FIRM
A partnership firm is a type of business
organization where two or more individuals come together to carry on a business
venture with a view to earning profits. The partnership firm is governed by the
Indian Partnership Act, 1932, which defines the rights, duties, and obligations
of the partners.
Partnership firms are popular among small and medium-sized
businesses because of their ease of formation, flexibility in management, and
tax benefits. In a partnership firm, the partners share the profits and losses
of the business in proportion to their agreed shares. The partners also
contribute capital to the business and are jointly and severally liable for the
debts and obligations of the firm.
A partnership firm can be registered or unregistered. The
registration of a partnership firm is not mandatory, but it is recommended as
it provides legal recognition and protection to the partners. A registered
partnership firm can also avail of certain benefits such as filing suits
against third parties and claiming set-off in legal proceedings.
The formation of a partnership firm involves creating a partnership
deed, which is a written agreement between the partners. The partnership deed
specifies the name of the firm, the nature of the business, the capital
contribution of each partner, the profit-sharing ratio, the rights and duties
of the partners, and the mode of management and dissolution of the firm.
Partnership firms are classified into two types: general
partnership and limited partnership. In a general partnership, all partners
have unlimited liability and are jointly and severally liable for the debts and
obligations of the firm. In a limited partnership, there are two types of
partners: general partners and limited partners. General partners have
unlimited liability, while limited partners have limited liability to the
extent of their capital contribution.
Partnership firms are taxed as per the Income Tax Act, 1961. The
profits of the partnership firm are taxed as per the income tax slab rates of
the partners. The partnership firm is also required to file an income tax
return every year and to obtain a tax deduction and collection account number
(TAN) for tax deducted at source (TDS).
In conclusion, a partnership firm is a popular form of business
organization that offers flexibility, ease of formation, and tax benefits to
its partners. However, it is important for partners to enter into a partnership
deed that clearly defines their rights and obligations to avoid disputes and
conflicts in the future.
FOR MORE INFORMATION CONTACT:https://ngotrust.in/
DO YOU KNOW HOW IT IS REGISTERED
A partnership firm can be
registered by following the below-mentioned steps:
1. Choosing
a name for the partnership firm: The partners must select a unique name for
their partnership firm that is not similar to the name of any other existing
firm or company.
2. Creating
a partnership deed: A partnership deed is a legal document that specifies the
terms and conditions of the partnership, such as the nature of the business,
the capital contribution of each partner, the profit-sharing ratio, and the
mode of management and dissolution of the firm.
3. Getting
the partnership deed notarized: The partnership deed must be printed on a
non-judicial stamp paper and notarized by a notary public.
4. Obtaining
a PAN card and TAN: The partnership firm must obtain a Permanent Account Number
(PAN) card and a Tax Deduction and Collection Account Number (TAN) from the
Income Tax Department.
5. Filing
an application for registration: The partnership firm must file an application
for registration with the Registrar of Firms in the state where the firm is
located. The application must be accompanied by the following documents.
a.
The original partnership deed b. A copy of the PAN card c. Proof of address of
the partners d. An affidavit stating that the information provided is true and
correct e. Payment of the prescribed registration fees
6. Verification
and registration: The Registrar of Firms will verify the application and
documents and, if satisfied, will register the partnership firm and issue a
Certificate of Registration. The registration process can take up to 15 days.
It is important to note that
registration of a partnership firm is not mandatory, but it is advisable to do
so as it provides legal recognition and protection to the partners.
FOR
MORE INFORMATION CONTACT:https://ngotrust.in/
WHAT
ARE ITS BENEFIT
There are several benefits
to registering a partnership firm, some of which are:
1. Legal
recognition: Registration of a partnership firm provides it with legal recognition,
making it a separate legal entity from its partners. This can help in enforcing
the rights and obligations of the partners and the firm.
2. Protection
of rights: Registration of a partnership firm can protect the rights of the
partners in case of disputes or litigation. A registered partnership firm can
sue and be sued in its own name, which can help to safeguard the interests of
the partners.
3. Access
to credit: A registered partnership firm can obtain loans and credit from banks
and financial institutions more easily, as it provides credibility and
stability to the firm.
4. Tax
benefits: A registered partnership firm can avail of several tax benefits, such
as deductions for business expenses, depreciation on assets, and reduced tax
rates for small and medium-sized businesses.
5. Better
marketability: A registered partnership firm is more attractive to customers
and clients as it signifies professionalism and stability.
6. Brand
protection: Registering a partnership firm also helps in protecting the brand
and goodwill of the firm, as it prevents other firms from using a similar name
or logo.
7. Easy
transfer of ownership: Registration of a partnership firm makes it easier to
transfer ownership in case of death or retirement of one or more partners, as
the firm can continue to exist as a separate entity.
FOR
MORE INFORMATION CONTACT:https://ngotrust.in/
HOW
MANY MEMBERS ARE THERE FOR PARTNERSHIP FIRM?
The minimum number of
members required to form a partnership firm is 2, while the maximum number of
members can vary depending on the jurisdiction and the nature of the business.
In India, the maximum number of partners allowed in a partnership firm is 50
for ordinary businesses and 20 for banking businesses, as per the provisions of
the Indian Partnership Act, 1932. However, it is important to note that the
number of partners can also be limited by the terms of the partnership
agreement.
FOR MORE INFORMATION
CONTACT:https://ngotrust.in/
FAQS
Here are some frequently asked questions related to
partnership firm:
What is a partnership firm?
A
partnership firm is a type of business entity in which two or more individuals
come together to carry out a business venture and share the profits and losses.
. How many members are required to start a partnership firm?
A minimum of two members are required to start a
partnership firm.
Is registration necessary for a partnership firm?
No, registration is not mandatory for a partnership firm, but
it is advisable to register the firm to avail of various benefits.
What are the documents required to register a partnership firm?
The documents required to register a partnership
firm include a partnership deed, address proof, identity proof, PAN card, and
bank account details.
How is a partnership firm taxed?
A partnership firm is taxed as a separate entity, and the profits are taxed at the applicable income tax rate.
What are the advantages of a partnership firm?
Advantages of a partnership firm include ease of formation,
shared decision making, shared responsibilities, and shared risks.
What are the disadvantages of a partnership firm?
Disadvantages of a partnership firm include unlimited liability, limited resources, lack of continuity, and potential conflicts between partners
.
How can a partnership firm be dissolved?
A partnership firm can be dissolved by mutual agreement among the partners, by
expiry of the term mentioned in the partnership deed, or by court order in case
of disputes.
Can a partnership firm be converted into a company?
Yes, a partnership firm can be converted into a company by
registering it under the Companies Act, 2013.
1 What is the maximum number of partners allowed in a partnership firm?
The maximum number of partners allowed
in a partnership firm can vary depending on the jurisdiction and the nature of
the business. In India, the maximum number of partners allowed in a partnership
firm is 50 for ordinary businesses and 20 for banking businesses.
Comments
Post a Comment