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Partnership Firm Registration

Partnership Firm Registration:

A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their reach. In order to come into being, every partnership necessarily involves a partnership agreement, even if it has not been reduced to writing. In common law jurisdictions a written partnership agreement is not legally required, but partners may benefit from a partnership agreement that articulates the important terms of the relationship between them.

Advantages and disadvantages

Partnership Firm AdvantagesPartnership Firm Disadvantages
It allows you to make decisions quickly. No need to wait for board approval or shareholder’s decision.Other Partners’ decisions might not be in accordance with yours.

As a result, a serious business decision may take a lot of time.

You can even start your business through Partnership Firm Registration Online in a day or two.It is not a separate legal entity. Business Partners are also liable for debts or losses.
You get mutual support and other people’s expertise for running the business. Unlike, Insole proprietorship where you are the sole person dependent on your expertise.If partners don’t decide the leader among themselves,

the partnership firm may not be able to take

the right decision at the right time.

The registration cost of the Partnership is nominal and the tax liability is also less.Misunderstanding can cause disruption in business activities.
Multiple partners can unite together and arrange funds for the business.Partners have to share the profits among them.

Compliance For Partnership Firm

  • Once the registration process of the firm is done, it is necessary for the partnership firm to obtain Permanent Account Number (PAN) and Tax Deduction Account Number from the Income Tax Department.
  • A Partnership firm needs to file ITR irrespective of the revenue or loss. For partnership firm, the rate of income tax on the whole of the total income will be 30% surcharge on income tax.
  • Partnership Firms having an annual turnover of over Rs. 100 lakhs are required to obtain a tax audit.
  • GST registration is required for businesses whose annual turnover exceeds Rs 40 lakhs ( Rs 20 lakhs for North Eastern states). For some businesses like Export-Import, E-commerce, and Market Place Aggregator, GST registration is mandatory.
  • After GST registration firms have to file monthly, quarterly and annual GST returns.

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Incorporating your business is a crucial step towards establishing a strong foundation for your entrepreneurial journey.

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