A Partnership Firm is a popular business structure in India for small businesses and professionals who want to work together. Before you register, here’s what you need to know:
Types of Partnership Firms in India:
- Registered Partnership – Registered under the Registrar of Firms.
- Unregistered Partnership – Not registered but legally valid (with some limitations in disputes).
Pros:
- Easy Formation – Simple agreement and minimal formalities.
- Low Cost – Affordable compared to other business structures.
- Shared Responsibility – Partners share work, profit, and risk.
Cons:
- Unlimited Liability – Partners are personally liable for debts.
- Limited Growth – Cannot raise funds from investors like a company.
- Risk of Disputes – Internal conflicts can affect business stability.
Procedure for Registration:
- Draft Partnership Deed – Includes name, nature of business, capital contribution, and profit-sharing ratio.
- Get Signed by Partners – Execute the deed on stamp paper as per state laws.
- Apply for Registration – Submit application to the Registrar of Firms with deed and partner details.
- Obtain PAN & GST – Apply for PAN and register for GST if applicable.
Bottom Line: Partnership firms are ideal for small businesses, but consider legal liabilities before choosing this structure.
