Partnership is the popular form of doing business. Partnership is as an association of two or more persons to carry on as co-owners a business for profit”. A partnership is not a separate legal entity distinct from its members.
In India, Partnership is governed by the Indian Partnership Act, 1932. Partnership is defined as per section 4 of the Indian Partnership Act 1932 is as under:
the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all.
There are two types of Partnership firms in India i.e. Registered Partnership Firm and Unregistered Partnership Firm. It is not a compulsion to register the partnership firm. However, is advisable to register your Partnership Firm Registration due to some additional advantages.
No Objection Certificate (NOC) from the owner
Pan Card of Partners
Address proof of Partners
Photographs of Partners
Ease of Formation
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.
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 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.