Partnership is the popular form of doing business. Partnership is as an association of two or more persons to carry on business as co-owners. Partnership Firm has no separate legal entity status. Partners of the firm are liable for the Acts of the Partnership Firm.
Partnership firms are governed through the Indian Partnership Act, 1932. Section 4 of the Indian Partnership Act 1932 defined partnership as under:
the relation between persons who have agreed to share profits of the business carried on by separately or jointly acting on behalf of all.
Partnership firms in India can be run as Registered Partnership Firm and Unregistered Partnership Firm. It is not compulsory to register the partnership firm with the Registrar. However, due to some additional advantages, it is advisable to register your Partnership Firm Registration.
No Objection Certificate (NOC) from the owner
Pan Card of Partners
Address proof of Partners
Photographs of Partners
Ease of Formation
Partnership firm can be formed easily without any statutory legal formalities. A written simple agreement or partnership deed is sufficient to create a partnership.
The partners are the owners of the business. Each partner has equal right to participate in the management and decision making of the business. Since, decision-making process is in the hands of Partners, there is less chance of conflict and hasty decisions.
Flexibility in Operations
At partnership firm the partners can decide to change the size or nature of the business or area of operation. There is no statutory requirement to follow.
In a partnership firm all the partners share the risks of the business in the agreed ration which is called Profit Sharing Ratio..