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The partnership is the very widely used form of business entity registered in India. It is defined as the transparent blueprint of the relation between two or more individuals who have planned to harvest the profits from a business operated by all the members or any one taking the responsibility of one. All such firms are needed to be registered under The Indian Partnership Act, 1932.
The people involved in such business entity are called partners and can allocate any name to their collective business, which is considered as the firm name. Partnership firms create a platform that draws more business ideas in the business than a sole proprietorship. This type of business entity helps in creating a pool of financial resources and manpower leading to a good and transparent governance.
Who is a partner?
Partner is a person who is one of the promoters in a partnership firm.
What is a Partnership deed?
A Partnership deed is an agreement between partners that describes the profit sharing ratio among the partners, remuneration to the partners, objects of the partnership firm, registered office details and all other key information that regulate the way business would be conducted and the key personnel who would be handling the business.
How many partners are required in a partnership firm?
A minimum of two partners are required to start a partnership firm. The maximum number of partners in a partnership firm is 10 except in case of banking firm where a maximum of 20 partners are allowed.
Which form of business can be converted into for Partnership firm?
A sole proprietorship can be converted into a partnership firm .A partnership firm can be scaled up into a Private Limited Company when there is a scope for expansion.
Can a NRI start a Partnership firm in India?
FDI is not allowed in India in form of sole proprietorship or partnership businesses except that NRIs are allowed to do so on non-repatriable basis
What is a Partnership Firm?
A partnership firm is a form of business entity which is formed with partners who are promoters of the entity. A partnership firm is registered under the partnership act 1932. A partnership firm has to be registered by the partners.
What is profit sharing ratio?
Profit is a crucial part of any business. Profit sharing ratio is the ratio in which the profit is to be distributed among the partners. This ratio is to be mentioned in the partnership deed.
What is the minimum share capital for starting a for Partnership firm?
There is no minimum share capital unlike a private limited Company. Hence, a partnership firm can start their business without a minimum capital.
Who can start a Partnership firm?
Like minded entrepreneurs with similar ideologies who want to start small and expand the organisation in near future and who believe that their personal funding would help them in building the business can opt for a partnership firm.
What are the yearly compliances with respect to Income Tax, Service Tax and VAT?
Income Tax: A partnership firm has to pay an advance tax on quarterly basis if the tax liability payable during the year is more than INR 10,000 and has to file income tax return on a yearly basis.
Goods & Services Tax (G.S.T): If the partnership firm’s taxable turnover exceeds Rs.20,00,000 it is liable to be registered under G.S.T and compliances applicable to GST Act have to be complied with.