MEANING:
It is a business entity where two or more individuals come together to carry on a lawful business with the object of earning profits, the relationship between the partners is governed by a partnership deed, which outlines the terms and conditions of the partnership.
TYPES OF PARTNERSHIP FIRMS:
In India Partnership firm is classified into two types namely Registered and Unregistered Partnership firm.
ADVANTAGES:
- Simple to establish with the minimal legal formalities.
- Partners have the flexibility to manage the business as per the agreed terms.
- Profits are taxed at the individual partners rate.
- Work load and liabilities are shared among partners eventually reducing individual burdens.
Procedure for Unregistered Partnership Firm involves:
- Mutual Agreement– Partners must agree to form a partnership.
- Drafting Partnership Deed– A legal document containing the terms and conditions of the partnership.
- Execution of Deed– Signed by all partners on a non-judicial stamp paper with notarization.
- PAN Application (if required)– Apply for PAN in the firm’s name.
- Opening a Bank Account– Use the deed and PAN to open a business bank account.
- Commence Business Operations– Start operations without registration under the Registrar of Firms.