For those opting to collaborate with partners in their business, the most straightforward approach is to establish a partnership firm. The key requirement is to register a partnership deed, serving as an agreement among the partners. This document outlines the responsibilities and obligations of each partner, along with the profit-sharing arrangement.

In accordance with “The Partnership Act, 1932,” a “Partnership” denotes the relationship between individuals who have mutually consented to distribute the profits of a business conducted collectively or by any of them acting on behalf of all.

Features

  1. The firm must have a minimum of 2 partners, with a maximum limit of 10 partners (extended to 20 for non-banking businesses).
  2. Each partner holds joint liability with all other partners for all actions undertaken by the firm during their tenure as a partner.
  3. Every partner is authorized to represent the firm, serving as both an agent of the firm and of the other partners.
  4. Minors are ineligible to become partners, but with unanimous consent from all partners, they may be admitted for the sole purpose of benefiting the partnership.
  5. While a partner can transfer their interest in the firm, the transferee does not gain the right to interfere in business operations; their involvement is limited to receiving a share of profits.
  6. Partners bear unlimited liability for the obligations and debts of the firm.

Benefits

  • It is easy to form.
  • As compared to sole proprietorship, partnership firm has large resources for business.
  • Sharing of risk by all partners individually.
  • Firm can be easily dissolve with mutual agreement of partners without any complex legal proceedings.

Checklist of documents

  • Copy of PAN card, Passport/ Voter-ID/Driving license of Partner(s).

  • Bank Statement of partner(s)/ Electricity bill.

  • Passport size photo of Partner(s).N

  • OC from owner of registered office and rent agreement or sale deed (if any).

  • Signature specimen of Partner(s).