The partnership in India is governed under the Indian Partnership Act, 1932. A relation between two or more person as a partner who has agreed to share the profits of a business run by them or by one or more persons acting for all of them. Hence, any individual who is competent under the Contract Act to enter into the contract is eligible for becoming a partner in the partnership firm. A written Partnership Agreement is called a Partnership Deed.

A Partnership firm can be registered with minimum two partners. Partners can be Individuals, HUFs or any other legal person. This is an ideal option for these seeking to collaborate, come together, and work together. Although partnership deed can be oral, generally a partnership deed is written to avoid any future conflict. Partnership deed is created on a judicial stamp paper obtained from the respective State Registrar Office and has to be signed by all the partners. It contains rights and duties of the firm and the partners.

Advantages Of Partnership Firm Registration In India

  • Easy Business Structure
    A partnership firm in India can be formed effortlessly because the only thing you need is partnership deed to get yourself registered. It takes around 10-15 days to cover all the formalities.
  • Easy Decision Making
    It is easier to make decisions in this type of firm as there are no regulations to pass a resolution.
  • Fundraising Is Easy
    Funds can be easily raised because a partnership firm has multiple partners, and they are capable of raising more contribution. Bank also consider partnership firm for sanctioning loans.
  • Easy Management
    In the Partnership deed, it has been mentioned the work and responsibility assigned to each partner according to their capability.

Disadvantages Of A Partnership Firm Registration In India

  • Unlimited Liability
    The liability of the partners is not limited to the partnership firm; in the case of debt partners, personal assets can be used.
  • Fixed Numbers of Members
    Maximum numbers of members are set to 20.
  • Less Trustworthy For The General Public
    A partnership firm can also work without incorporation. It also operates without any strict rules and regulations, which makes it less reliable.
  • Abrupt Dissolution
    It can easily dissolve in case of death or insolvency of a partner and this hampers the business growth.

Key decisions to be taken while setting up a partnership firm

  • How many partners shall collectively own the firm?
  • What amount shall each partner contribute?
  • How will profits and liabilities be shared among them?
  • How many partners shall be actively involved in the management of the business?
  • Whether partnership firm will be registered or not?
  • What will be the proposed business activity of the firm?
  • What will be the name of the firm?
  • What will be the authorised capital of the firm?

Stamp Duty for Partnership Deed in Maharashtra

The stamp duty in Maharashtra and the selection of stamp paper for partnership firm registration depends on the fixed capital of the firm. The break-up is as follows –
If there is no sharing of contribution and the amount does not exceed INR 50,000, a stamp duty of ₹ 500 is applicable
If the fixed capital paid in cash is more than ₹ 50,000, stamp duty which is the lesser of 1% of the capital or ₹ 15,000 is applicable.

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A Partnership firm can be registered with minimum two partners. Partners can be Individuals, HUFs or any other legal person.