PARTNERSHIP FIRM REGISTRATION

A Partnership firm is an entity created by persons who have agreed to share profits or loss of the business. Partnership is an association of two or more persons to carry on a business in the capacity of co-owners. Each such person is called a partner. All the partners share the profits and losses in proportion of their respective ownership, or as agreed between them. Partnerships are very easy to manage to start small enterprises wherein two or more persons decides to contribute to a business and share the profits or losses. In India, Partnerships are widely popular because of its ease of formation and minimal regulatory compliance. Also, the concept of LLP was introduced only in 2010, whereas the Partnership Act, 1932 has been in existence before the independence of India. Thus, partnership firms are the most prevalent type of business entity.

Section 4 of The Partnership Act, 1932 defines partnership as “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”

Since a proprietary form of business is faced with many limitations mainly the amount of money that can be invested by a businessman in a business and the limitations in strategic decisions, Partnership Firms are formed to remove these limitations and allows the growth of business.

It is advisable to get a Partnership Firm registered to ensure that the firm gets a legal proof of its existence though it is not mandatory.