Registration of Partnership Firm

What is a partnership business?

A partnership business is a legal arrangement by two or more parties to control and run business and share profits and liabilities. There are two type of partnership firm:-

Registered firm :-

A Partnership firm duly registered with the Registrar of Firm. As per the Act, When the Registrar is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms and shall file the statement.

Unregistered firm :-

A partnership firm which is not registered with the Registrar of the Firm. The act doesn’t require the partnership firm to be registered in other words.

Who should start a partnership business :-

Anyone, who is comfortable in working with other people and has no objection in sharing the management and operations of the business, Also, someone who is absolutely ok with sharing the profits with other people, can get into a partnership business and can enjoy the perks.

How to start partnership business?

1) Make decisions about partners.

The first step is the main and very crucial step, one should decide the following things among the partners before starting a partnership business:-

• A) Partners' contribution to the firm capital
• B) Partners' share of profit
• C) Partners' type

2) Finalisation of Partnership Business Name

3) Register your partnership with state as per the applicable provisions

4) Create a Partnership Agreement having all the terms and condition mentioned in it and signed by all the partners. You are now ready to commence your business legally.

1. Additional helping force :-

It’s is really difficult to manage a business with all the late nights, humongous amount of work and busyness. Hence it’s always fruitful to have a business partner, to share the load and who can help you by dividing up the task. It becomes very convenient and less straining if you have some additional helping hands.

2. Lower Financial Burden :-

To start a business, one has to incur a lot of expenses and overhead charges for land, inventory, equipments, etc. Having a business partner can ease off your financial burden by sharing the expenses and with a helpful hand a business can purchase more things up front. And it also helps in avoiding large amount of debt, when starting your business.

3. Very few tax forms :-

In a partnership business, there are no additional business entity taxes. This means you don’t have to fill out and file business tax forms. Instead, taxes pass through to the business owners. You will include your share of profits and losses on your individual tax return. You are liable for paying any additional taxes.

1. Restrictions to freedom :-

In a partnership business, you cannot act independently, you have to run all the decisions with your partner. You have to coordinate with your partner and work accordingly. If any one among the partners make a reckless decision, all the partners are held responsible for it.

2. Splitting of profits :-

When you run a business on your own, you are liable to all the profits gained by the firm, but in a partnership firm the profits are distributed among all the partners equally.