Register Your Partnership Firm with Us
What Partnership Firm refers to?
A partnership firm is a type of business entity formed by two or more individuals who come together to carry out a business with a view to making a profit. In a partnership firm, the partners share the profits, losses, and management responsibilities as per the terms of their partnership agreement.
An application form along with fees should be submitted to the Registrar of Firms of the State in which the firm is situated for registering a partnership firm. The application has to be signed by all partners or their agents. After the Registrar of the Firms is satisfied with the correctness of the application, he will register the firm in Register of Firms and issue Certificate of Registration.
Step - 1 : CHOOSE A NAME FOR YOUR PARTNERSHIP FIRM
You can choose any name for your partnership firm, as long as it follows the rules set by the Registrar of Firms.
Step - 2 : DECIDE PARTNER PROFIT SHARING RATIO, FIRM ADDRESS, AND OTHER TERMS OF PARTNERS
Partners have to decide their profit and loss sharing ratio, address of firm from where business shall be operating, investment, duties and responsibilities of each partner, terms of entering new partner or exiting old partner and other relevant terms which mutually agreed upon among all partners.
Step - 3 : DRAFT PARTNERSHIP DEED AS PER THE PARTNERSHIP ACT 1932
You need to hire a Professional (Chartered Accountant) to draft a partnership deed as per the provision of the Partnership Act, 1932. A Professional will assist you in buying appropriate value of stamp paper, deed printing, obtain signature of all partners in deed, do attestation work and apply for partnership firm registration.
Why Partnership Deed is Required for a Partnership Firm?
- Name and address of the firm: The partnership deed specifies the name and address of the partnership firm.
- Names and addresses of the partners: It lists the names and addresses of all the partners involved in the partnership.
- Nature of business: The partnership deed defines the nature of the business activities that the partnership will engage in.
- Capital contributions: It specifies the amount of capital contributed by each partner to the partnership, as well as the method of contribution (e.g., cash, property, or services).
- Profit-sharing ratio: The partnership deed outlines how profits and losses will be shared among the partners. This is usually based on the capital contributions of each partner or as agreed upon by the partners.
- Rights and duties of partners: The partnership deed specifies the rights, duties, and obligations of each partner within the partnership.
- Duration of partnership: It may specify the duration of the partnership, whether it is for a specific period or until a particular event occurs.
- Dissolution procedures: The partnership deed may outline the procedures to be followed in the event of dissolution of the partnership, including the distribution of assets and settlement of liabilities.
What are the benefits of Partnership Deed?
A partnership deed is required to provide legal recognition to the partnership and to establish the terms and conditions governing the relationship between partners. It serves multiple uses, including preventing disputes, protecting interests, guiding operations, ensuring legal compliance, facilitating decision-making, and preparing for contingencies.
Legal Recognition:
A partnership deed provides legal recognition to the partnership entity. It establishes the partnership as a separate legal entity distinct from its individual partners.
Prevention of Disputes:
By clearly defining the terms of the partnership, the deed helps prevent misunderstandings and disputes among partners. It provides a framework for resolving conflicts that may arise during the course of business operations.
Adherence to Legal Requirements:
In many jurisdictions, having a written partnership deed is a legal requirement for the formation of a partnership. It helps ensure compliance with legal regulations governing partnerships and business entities.
Clarity and certainty:
It helps in avoiding misunderstandings among partners by clearly defining the terms of the partnership, including profit-sharing, decision-making, and other important aspects.
Facilitation of Decision-Making:
The partnership deed facilitates decision-making within the partnership by specifying the procedures for making important business decisions. It outlines the process for consensus-building among partners and may include provisions for voting or other decision-making mechanisms.
Compliances Required for a Partnership Firm
GST Registration
Partnership Firm in India requires GST Registration. GST Registration Process is 100% online and there is no requirement of submission of physical document to GST Department. GST Registration must be obtained within 30 days of business incorporation, otherwise the business will be subject to many penalties.
GST Return
Under the Goods & Services Tax regime which apparantely rolled out in 2017, partnership firms having GST Registration would be required to file GST return. GST return can be filed Monthly, Quarterly and Annually. As filing of GST is mandatory for all the registered Taxpayers including Partnership Firms.
Accounting
The accounting for Partnership firm is essential Compliance. Every partnership firm shall maintain proper books of accounts which shall represent an accurate and fair view of the state of affairs of the Firm . In essence, a separate account tracks each Partners investment, Distribution, etc.
Tax Audit
The Income Tax Audit would be needed for partnership firm if the total sales turnover is more than Rs 1 Crore during the Financial Year. In case of a Professional Firm, the Tax Audit would be necessary if total Gross Receipts exceeds Rs 50 Lakhs throughout the financial year under assessment.
IT Return
Income Tax Return should be filed by all Partnership Firms. The Income Tax Return of partnership firm that doesn't need an audit is due on the 31st of July. If the Income Tax Return of a partnership firm is to be audited according to the Income Tax Act, then the return would be unpaid on the 30th of September.
TDS Return
Quarterly TDS returns must be filed by partnership firm that have TAN and are required to deduct tax at source as per TDS rule. A TDS return is a quarterly statement which has to be submitted to the IT Department of India. It should contain all details of TDS deducted and deposited by you for a particular quarter.