Partnership Firm- a complementary inning by partners!
Tendulkar and R. Dravid are remembered for their highest Partnership runs in India Vs New Zealand, One-day Cricket at Hyderabad on 8th Nov. 1999. Mutual understanding & Trust is the key to a successful partnership. The same principle applies to business partnerships also.
The partnership firms are governed by The Partnership Act, 1932.
The Act defined a Partnership as “Partnership is a relation between two or more persons who have agreed to share the profits of business run by all or any one of them acting for all.”
For formation of Partnership requires PAN, Aadhar, Passport size photos, Valid address proof of all the Partners, Valid address proof (in case of rented premises NOC of the owner along with his PAN and Aadhar required).
The partnership deed shall be appropriately stamped as per the stamp act of the State. In Maharashtra stamp duty of Rs 500/- is required for the capital upto Rs 50,000/-, For every additional capital of Rs. 50,000/- or part thereof stamp duty of Rs 500/- is to be paid. Maximum stamp duty is Rs 15,000/-.
You may follow following simple Steps to form a Partnership Firm
- Decide the name of your Partnership business.
- Decide the ratio in which the capital to be shared by the partners.
- Decide the ration in which Profit / Loss to be shared by the partners
- Decide if Active partner(s) to be paid remuneration
- Decide if the partners are entitled for Interest on Capital contributed by them
- Draft the Partnership Deed, Clearly Stating the terms of partnership.
- Purchase the Stamp paper of appropriate value (as per the Stamp Act of the State) and attach the same
to the Partnership deed.
- File an online intimation under Maharashtra Shops and Establishments @ https://lms.mahaonline.gov.in/ stating that you have started a new partnership business and the number of employees are less than 10. In case you have more than 10 employees you need to apply for a registration under Maharashtra Shops and Establishment Act. (please check out similar registration in your State if you are not in Maharashtra)
- Apply for Udyam Aadhar at https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm This registration which helps you in availing certain benefits of Government schemes for MSME.
- Apply of Income Tax Permanent Account number (PAN)
- Open a Current Bank account in a Bank in the name of the Partnership firm.
- Apply for Profession tax number ( PTEC and PTRC) https://www.mahagst.gov.in/en/new-dealer-registration The business organization need to pay the profession tax as per the schedule prescribed and also collect and pay the profession tax from salaries of employees. For both payments PTEC and PTRC numbers to be obtained. (please check out similar registration in your State if you are not in Maharashtra)
FAQs about Partnership Firm
- If the registration of partnership firm with Registrar of firms is compulsory?
Answer: No. registration of partnership firm with Registrar of firms (ROF) is optional. However, it is advisable to get the firm registered with ROF.
- Is it necessary that all the partners shall contribute the capital in the partnership firm?
Answer: No. Capital is not essential requirements. There could be a Partnership without a capital.
- Is there any restriction on maximum no of persons as partners in the partnership firm?
Answer: A partnership firm can have maximum 20 partners.
- If Minor can be admitted as partners in the partnership firm?
Answer: Yes, Minor can be admitted in the partnership firm only for the limited purpose of availing benefits of the partnership firm.
- Is it necessary that all the partners shall the losses of the partnership firm?
Answer: As per partnership act, Profits to be shared by all partners but not necessarily the losses.
- What need to done, if I wish to replace/ alter the clauses of the partnership deed?
Answer: The terms of partnership can be amended/ replaced any time with mutual consent of all the partners.
- How to admit new partner(s) in the firm? How to get retired from the firm?
Answer: The terms of partnership can be amended to give effect to admission/ retirement of partner(s) any time. The terms of admission/ retirement are to be clearly mentioned in the amended partnership deed signed by all the partners.
- How to close the Partnership Firm?
Answer: Partners mutually can close the partnership firm if they wish to do so by paying off all the debts of the firm and distributing the balance assets of the firm amongst partners.
- If partnership firm can be converted in to Limited Liability Partnership or a Private Limited company?
Answer: Yes, partnership firm can be converted to LLP or a Limited liability company any time.
- If Partnership firm is recognized in the international trade?
Answer: Yes. However, some corporates/ Global organization prefer the corporate entities for the business relations.
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