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General Partnership

The right structure for solo entrepreneurs looking beyond the opportunities a sole proprietorship affords.

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Why does a Partnership Firm need to be registered?

Registering a Partnership Firm is the right choice when it comes to running
a small business, as it invoves minimal compliance requirements.

Gather Details
We'll first understand your business
requirements

Step 1

Document Drafting
The first draft will be shared with you
in four days

Step 2

Iterations
We do two rounds of iterations, if necessary,
at no extra cost

Step 3

Gather Details
We'll first understand your business requirements
Document Drafting
The first draft will be shared with you in four days
Iterations
We do two rounds of iterations, if necessary, at no extra cost

What is a General Partnership?

A General Partnership is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in the Partnership Deed. This structure is thought to have lost its relevance since the introduction of the Limited Liability Partnership (LLP) because its partners have unlimited liability, which means they are personally liable for the debts of the business. However, low costs, ease of setting up and minimal compliance requirements make it a sensible option for some, such as home businesses that are unlikely to take on any debt. Registration is optional for General Partnerships.

All You Need to Know

6 Essential Facts on Partnership


What is a partnership firm?

A partnership firm is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed that may or may not be registered. In such a business, the members are individually partners and share the liabilities as well as profits of the firm in a predetermined ratio.

Why should I set up a partnership firm?

A partnership firm is best for small businesses that plan to remain small. Low costs, ease of setting up and minimal compliance requirements make it a sensible option for such businesses. Registration is optional for General Partnerships. It is governed by Section 4 of the Partnership Act, 1932. For larger businesses, it has lost its relevance with the introduction of the Limited Liability Partnership (LLP).. This is because an LLP retains the low costs of a partnership while providing the benefit of unlimited liability, which means that partners are not personally liable for the debts of the business.

Is a partnership firm a separate entity?

The partners in a partnership firm are the owners, and thus, are not a separate entity from the firm. Any legal issues or debt incurred by the firm is the responsibility of its owners, the partners.

How many partners can there be?

A partnership must have at least two partners. A partnership firm in the banking business can have up to 10 partners, while those engaged in any other business can have 20 partners. These partners can divide profits and losses equally or unequally.

Is partnership firm registration necessary?

No, registration of a partnership is not necessary. However, for a partner to sue another partner or the firm itself, the partnership should be registered. Moreover, for the partnership to bring any suit to court, the firm should be registered. For this reason, it is recommended that larger businesses register the partnership deed.

What are the main aspects of a partnership deed?

The deed should contain names of the partners and their addresses, the partnership name, the date of commencement of operation of the firm, any capital invested by each partner, the type of partnership and profit-sharing matrix, rules and regulations to be followed for intake of partners or removal.

Documents Required for Partnership Registration


  • Form No. 1 (Application for registration under Partnership Act)
  • Original copy of Partnership Deed, signed by all partners
  • Affidavit declaring intention to become partner
  • Rental or lease agreement of the property/campus on which the business is set

Benefits of a Partnership


Minimum Compliance

For General Partnerships, there is no need for an auditor to be appointed or, if the company is still in the process of registration or incase unregistered, annual accounts filing with the registrar is not necessary either. When compared to LLP, annual compliances are also fewer. Further, taxes depending on turnover, service and sales tax also need not be filed in General Partnerships.

Simple to Begin

General Partnerships can begin simply with an unregistered deed of the partnership within 2-4 business days. However, having registration for the same has its own perks and advantages. The primary advantage for having a registered firm is that it will allow you to book lawsuits in courtrooms opposing another business or the business associates in the firm for the administration of rights addressed in the Partnership Act.

Comparatively Economical

In comparison to LLP, a General Partnership is much cheaper to begin. Even in the longer run, it will still work out inexpensive as the compliance requirements are very minimal. For example, there is no need for an auditor. Therefore, Home businesses still opt for this, although it offers unlimited liability.

Common Partnership Policies

4 BUSINESS DAYS

Once we receive your request, our representatives will contact you to better grasp your specifications. Additionally, If other information is needed, we will reach out to you once again. Our lawyers and legal experts will carry out your requests. Once they are done, it will be sent for your viewing and verification within 4-5 business days. However, you can always contact us if there are changes needed.

4 BUSINESS DAYS

If there are any changes required to the agreement, our experts will have them altered. As agreed upon iteration changes twice is covered in the original cost.

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Types of Government Registrations

Recommended For

Ease of Accommodating Investment

Limited Liability Protection

Tax Advantages

Perpetual Existence

Statutory Compliances

Partnership Firm
Limited Liability Partnership
One Person Company
Private Limited Company
Sole Proprietorship

Home businesses

Almost impossible

No

Minimal

No

Minimal

Professional services firms

Possible, but unlikely

Yes

Most efficient

Yes

Low

Sole promoters

Possible, but severely unlikely

Yes

Few benefits

Yes

High

Start-ups and growing companies

Very easy to accommodate

Yes

Few benefits

Yes

High

Small traders and manufacturers

Impossible

No

Minimal

No

Minimal

Why Vakilsearch



8 BUSINESS DAYS

Getting the partnership deed is very simple. All you got to do is tell us about your company or business and we will get the partnership deed processed in 8 business days. Along with your request, we will be working on 400 business registrations every month

9.1 CUSTOMER SCORE

We make your interaction with government as smooth as is possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.

160 STRONG TEAM

Our team of experienced business advisors are a phone call away, should you have any queries about the process. But we'll try to ensure that your doubts are cleared before they even arise.

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