Advantages of Starting Up as a Partnership Firm

Last Updated at: October 22, 2019
stamp duty

If you want to start a business, then you might have many ideas. But not all these business ideas will work out and turn successful. And, in some cases, you might need financial support to start a private limited company. In that case, you can opt for a partnership business and here you will get to know the advantages of doing so.

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As an entrepreneur, you will have many ideas for a business. You won’t try all of them, and there’s a good chance some of them won’t even get off the ground. So while there needs to be room for optimism while starting all businesses, it is sometimes naive to simply go ahead and start that private limited company. If you believe this is the situation you and your partners are in, a partnership may just be the right move. Let’s list the reasons:

Easy to Start: A partnership doesn’t require all the formalities needed when starting a private limited company or limited liability partnership. It just needs the partnership deed on stamp paper; you can register it, which is only a day’s work, but even this is optional and honestly unnecessary this early in your business.

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Convenient to Dissolve: A private limited company can only be closed after a full year is up. Does any business follow this logic? And it takes over a year to then close a company. A partnership can be closed very easily through dissolution.

Conversion to Private Limited: Starting out as a partnership doesn’t mean you can’t switch. There are specific procedures to enable conversion to a private limited company or any other type of business entity.

No Compliances: At the start of your business, you don’t want to be saddled with compliance work. You just want to focus on your business. With a private limited company, there’s always something else in the way (unless you hire someone to handle this for you). With a partnership, you don’t have this hassle.

Cheap to Set-up: A private limited company will cost you Rs. 15,000 just to start, and then there are compliance and auditor’s fees. Do you want all this baggage when you’re just starting out? If you’re only experimenting, you wouldn’t. Instead, a partnership will only cost you around Rs. 2000.

If you were skeptical about starting a partnership business, then you would have got more clarity from the content above. Well, it will be easy to start the business as there is not many formalities involved in starting the company as a limited liability or private limited company. If you have more doubts, then you can approach aa legal expert to get your doubts answered.