Partnership Firm Registration

A partnership firm is a business house which is formed by two or more individual who agrees to share there profit and loss of the business. Starting a partnership is a firm is the best choice for small and medium enterprises wherein the individuals decide to contribute to a business and agree upon the share in the profit and losses. The partnership is highly recommendable as it involves less effort in the formation and minimal compliance.

A Partnership firm is a business structure which is in existence from 1932, The partnership Act 1932 is in existence from even before we got the independence of India. But this business structure lost its preference among the young entrepreneurs after the introduction of the Limited liability Partnership Act 2010. The main reason for this was the normal partnership firm has unlimited liability which in the case of LLP the liability is limited and even it is treated as a separate entity.

Partnership firm and the partners are not separate i.e the partnership firm isn’t a separate legal entity. So the assets and the liability of the business are owned by the partners. The maximum number of individuals who can form a partnership firm are 10 for banking business and 20 in the case of other businesses. Every partner of the firm can carry out the business on behalf of other partners.

Shared Responsibilities

In a partnership firm, the responsibility is shared between the partners. The word partnership itself denotes that individuals come together to a common agreement to do business. The responsibility of the partners can be mentioned in the partnership deed for each and every partner.

Operating Flexibility:

A Partnership firm is worked based on the Partnership deed drafted by the partners with mutual understanding. The partners can make a decision on how to run the business with their mutual understanding. Additionally, the Partnership Deed can be changed by the partners whenever it is required or necessary even though partnership deep is registered. There are no limitations with respect to maintaining the business, as long as it comes undersigned arrangement.

Pre-defined Object or Period:

At the time of Partnership firm registration itself, the deed contains the pre-defined business goals and activities, which is the primary objective to start the business. A partnership firm can be formed for a particular time period or for a particular project. When the same is finished, the partnership firm is dissolved.

Various Financial Returns to the Partners

Partners engaged with the firm get different sorts of profits for their capital as well as their individual efforts. The working partner additionally gets salary addition to the interest on capital and portion of the benefit, according to the mutual understanding of the partners.

Cost:

The cost for registration of LLP is slighter higher than the cost for
registration of a partnership firm. LLP registration can be done online through Taxxinn at just Rs.5899. A partnership firm can be registered online through Taxxinn at just Rs.5899.

Authority:

A Partnership firm is registered under the register of firms that comes under the state government. Whereas LLP is registered under ministry of corporate affairs, which comes under the central government.

Limited Liability Protection:

The primary advantage of a Limited Liability Partnership over a normal partnership firm is that in an LLP, one partner is not liable for another partner’s unfortunate behavior or carelessness. Likewise LLP provides limited liability protection for the partners from the debts of the LLP. However, in contrast to private limited company investors, the partners of an LLP have a right to manage the business directly.

Unlimited Liability:

Each and every partner of the partnership firm is personally liable for the
losses in the firm. The personal assets of the partner are taken into the task
for repaying the debts. This was the reason to introduce LLP

Number of Members

The maximum number of individuals allowed in a partnership firm is
restricted to 20 but in the case of LLP, there is no restriction on numb er of
partners.

Lack of a Central Figure

The leadership decides the upliftment of the firm. Combined ownership
takes out that feature. In the case of LLP, certain partners are given higher
responsibility and power. Those partners are given a position as
designated partners

Trust of the General Public

There is no proper structure or regulation for conducting the operation in a
partnership firm. It is easy to start and dissolve which leads to distrust
among the general public

Name of the partnership firm. Basic details of the partners. Starting date of the business. Period of the firm's existence. Capital invested by each partner. Profit and loss sharing ration. Intrest for the capital which is payable to partners. Borrowing limitations of each partner. Remuneration to the partners, If any The process of the admission of a new partner and the retirement ofa partner. Preparation of firm accounts. The process to be followed in case of a dispute between partners.