How to Start a Partnership Firm in India.

Why to start a Partnership Firm?

A partnership business is more distributed. And, varies in terms of perspectives. Firstly, composition of 2 and more entities leads to a better output. For instance, one person might be sharp in a particular skill and weak in the other. So, that weak space can be filled by a partner in this form of business. Thus, yielding better profits. Since, there is more work power. Earning profits becomes a comparatively easier task. No personal property is considered in legal statements such as banks. In case a legal notice is issued, it is done in the name of the firm. Not the partners individually. Partnerships provide much more business opportunities. For instance, one can be a silent partner. And, run a business side by side. Hence, no active participation is done by the person except the capital investment. And a profit is also earned.

 In short a partnership firm has the following benefits:

• Easy Management
• Less Risky
• Separate Legal Entity
• More Business Opportunities

Types of Partnership Firms

There are two types of Partnerships. Firstly, is the registered partnership. And the second is Unregistered partnership. A registered partnership in registered with the government. While unregistered is not. This does not imply that unregistered partnerships are illegal. They are legal. But there are additional benefits of registering the firm. While, the Income Tax observes the taxation in the same manner for both types. India Partnership Act of 1932 registers all the Partnership firms under itself.

For Instance, a registered partnership has benefits like:

Filing a Suit- A registered partnership is free to file a suit in the firm’s name. For instance, if a consumer denies to pay the responsible amount. The firm can file a case. Hence, leading to a legal action against that body.

What is a Partnership Deed?

A set of statements formed by the agreement of all the partners is called a deed. It consists the share percentage each partner has. And, the investment done by the individuals. Specifically, noting the statistical record of all the investments and percentage share. Share percentage is the amount of share that each partner gets. The share percentage remains same for the profit gained exclusive of the total income of the business. Forming a deed is the first step to building a partnership. As government refers to the deed in case of any dispute amongst the partners. 

Alteration of deed is possible later. But, it requires the presence and acceptance of all the owners associated with the firm.

What are the Documents Required for Starting a Partnership Firm?

For PAN Card
A partnership firm has an independent PAN card. Not the PAN card of a specific partner. Thus, one PAN represents the whole firm. Required documents  are  as follows.

Aadhar Card and PAN card of the partners individually.
The Partnership Deed. -The deed formed in the beginning of the formation of the firm. The one having the recorded statements. And, the general set of rules for the firm.
Address Proof.

Bank Account Opening
Formation of a new firm requires a new bank account too. This account is used for the transactions of the firm. Thus, an aid to manage the economical status of the firm.

PAN Card.- PAN Card of the firm is mandatory.
Address Proof- Rent agreement is enough for the address proof. It should have the firm’s address.

Timelines

PAN Card- It takes 7-10 working days. The application takes less than a day. But, the delivery of the physical card takes time.
Bank Account opening- Bank account opening takes 7-10 days. While, in some cases it might even take a month.

Summary

A combination of a greater number of minds, gives a broader perspective and good ideas to develop. Therefore, new ideas help in growth. There are certain number of compliances to apply for as well.  Government taxation is comparatively simpler in this form. Unlike, the other bigger forms. A partnership firm can independently apply for loans.  On the other hand, deed is mandatory. Some of the compliances are also mandatory while other are optional. Thus, one concludes that partnership business is an easy and efficient form. And, it is easy to manage and grow.