Partnership Firm

Description

Partnership firms are governed by the Indian Partnership Act (1932), which defines a partnership as a “relation between persons who have agreed to share the profits of a business carried by all or any of them acting for all”. 

• The number of partners in a partnership firm can vary, with the minimum two and maximum number being ten for banking businesses and twenty for other businesses.
• Easy to establish, with their registration being very simple.
• Partnership firms have minimum compliance requirements.
• Faster decision making is faster because there is no concept of the passing of resolutions.
• Partnership firms are very flexible organizations; suitable changes can be easily introduced whenever necessary.
• In a Partnership Firm, each partner has an unlimited Liability in a firm
• Best suited for medium-sized businesses and professionals need full flexibility.

Governing law & Compliance

• Partnership firms are set up using a legal document called the partnership deed. In this deed, the manner in which profits and losses are to be shared among the partners heading the firm needs to be explicitly specified.  This document mentions the way roles and responsibilities of partners, mode of operation of business and will be the base to settle any future disputes among partners. Deed should be drafted very carefully covering all known aspects like salary to any partner, partner is full time or part- time, interest on capital / loan given by a partner etc.