Posted: Sep 05, 2019
Partnership is an agreement/deed between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.
Basic Requirement to start Partnership Firm :
- Partnership Deed
- Firm Pan Card
- GST Registration
- Opening of Current Account
- MSME Registration
Documents Required for start Partnership Firm :
- Copy of All Partner’s PAN Card, Address & Identity Proof & Residential Proof & Photographs.
- If the signing person is authorized person then his/her Name, Address, Designation & Telephone number.
- Address Proof of the proposed Office Premises. (Latest Electricity or Telephone Bills or Municipal Taxes)
- If address is rented then, Rent Agreement along with the address proof of the owner.
Easy to form: Like sole proprietorships, partnership businesses can be formed easily without any compulsory legal formalities. It is not necessary to get the firm registered. A simple agreement or partnership deed, either oral or in writing, is sufficient to create a partnership.
Availability of large resources:
Since two or more partners join hands to start a partnership business, it may be possible to pool together more resources as compared to a sole proprietorship. The partners can contribute more capital, more effort and more time for the business.
The partners are the owners of the business. Each of them has equal right to participate in the management of the business. In case of any conflict, they can sit together to solve the problem. Since all partners participate in the decision-making process, there is less scope for reckless and hasty decisions.
Flexibility in operations:
A partnership firm is a flexible organization. At any time, the partners can decide to change the size or nature of the business or area of it’s operation. There is no need to follow any legal procedure. Only the consent of all the partners is required.
In a partnership firm all the partners "share" the business risks. For example, if there are three partners and the firm makes a loss of Rs.12,000 in a particular period, then all partners may share it and the individual burden will be Rs.4000 only. Because of this, the partners may be encouraged to take up more risk and hence expand their business more.
Protection of interest of each partner:
In a partnership firm, every partner has an equal say in decision making and the management of the business. If any decision goes against the interest of any partner, he can prevent the decision from being taken. In extreme cases an unsatisfied partner may withdraw from the business and can dissolve it. In such extreme cases the "partnership deed" is required. In absence of the partnership deed, no legal protection is given to the partners.
Benefits of specialization:
Since all the partners are owners of the business, they can actively participate in every aspect of business as per their specialization, knowledge and experience. If you want to start a firm to provide legal consultancy to people, then one partner may deal with civil cases, one in criminal cases, and another in labor cases and so on as per the individual specialization. Similarly, two or more doctors of different specialization may start a clinic in partnership
5-10 days after receipt of all the necessary Documents.
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