Partnership Accounting
- Turnover Sales 40 Lakhs Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
- Turnover Sales 40 Lakhs-1 cr Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
- Turnover Sales 1 cr-2 cr Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
- Turnover Sales 2 cr-5 cr Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
- Turnover Sales 5 cr-10 cr Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
- Turnover Sales 10 cr-20 cr Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
- Turnover Sales 20 cr-50 cr Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
- Turnover Sales 50 cr-100 cr Extra Fees
- 1 Year Accounting
- 1 Year Income Tax Filing
- 1 Year Annual Return Filing
- Financial Statement Preparation
- 24/7 support
Partnership Firm
What is a Partnership firm?
A partnership firm is a type of entity where more than one person is carrying out business under one entity. Partnerships firms in India are of two types – Registered partnership firms and unregistered partnership firms.
Registering a Partnership is the right choice for small enterprises as the formation is straightforward and there are minimal regulatory compliances.
The Partnership Act has been in existence in India since 1932, making partnerships one of the oldest types of business entities in India. A partnership firm can even be registered after it is formed. There are as such no penalties for non Registration of a Partnership firm. But unregistered Partnership firms are denied certain rights under section 69 of the Partnership Act that majorly deals with the effects of non Registration of Partnership firms.
The income tax defines a Partnership firm as “Persons who have entered into a partnership with one another are called individually “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”. Hence, a firm that does not have a registration certificate from the registrar is an unregistered Partnership firm.
Advantages of Partnership Firm
Easy to Incorporate
The incorporation of a partnership firm is easy as compared to the other forms of business organisations. The partnership firm can be incorporated by drafting the partnership deed and entering into the partnership agreement. Apart from the partnership deed, no other documents are required. It need not even be registered with the Registrar of Firms. A partnership firm can be incorporated and registered at a later date as registration is voluntary and not mandatory.
Less Compliances
The partnership firm has to adhere to very few compliances as compared to a company or LLP. The partners do not need a Digital Signature Certificate (DSC), Director Identification Number (DIN), which is required for the company directors or designated partners of an LLP. The partners can introduce any changes in the business easily. They do have legal restrictions on their activities. It is cost-effective, and the registration process is cheaper compared to a company or LLP. The dissolution of the partnership firm is easy and does not involve many legal formalities.
Quick Decision
The decision-making process in a partnership firm is quick as there is no difference between ownership and management. All the decisions are taken by the partners together, and they can be implemented immediately. The partners have wide powers and activities which they can perform on behalf of the firm. They can even undertake certain transactions on behalf of the partnership firm without the consent of other partners.
Sharing of Profits and Losses
The partners share the profits and losses of the firm equally. They even have the liberty of deciding the profit and loss ratio in the partnership firm. Since the firm’s profits and turnover are dependent on their work, they have a sense of ownership and accountability. Any loss of the firm will be borne by them equally or according to the partnership deed ratio, thus reducing the burden of loss on one person or partner. They are liable jointly and severally for the activities of the firm.
Disadvantages of Partnership Firm
Unlimited Liability
The biggest disadvantage of the partnership firm is having an unlimited liability of the partners. The partners have to bear the loss of the firm out of their personal estate. Whereas in a company or LLP, the shareholders or partners have liability limited to the extent of their shares. The liability created by one partner of the partnership firm is to be borne by all the partners of the firm. If the firm’s assets are insufficient to pay the debt, then the partners will have to pay off the debt from their personal property to the creditors.
No Perpetual Succession
The partnership firm does not have perpetual succession, as in the case of a company or LLP. This means that a partnership firm will come to an end upon the death of a partner or insolvency of all the partners except one. It may also be dissolved if a partner gives notice of dissolution of the firm to the other partners. Thus, the partnership firm can come to an end at any time.
Limited Resources
The maximum number of partners in a partnership firm is 20. There is a restriction on the number of partners, and hence the capital invested in the firm is also restricted. The capital of the firm is the sum total of the amount invested by each partner. This restricts the firm’s resources, and the partnership firm cannot take up large scale business.
Difficult to Raise Funds
Since the partnership firm does not have perpetual succession and a separate legal entity, it is difficult to raise capital. The firm does not have many options for raising capital and growing its business as compared to a company or LLP. As there are no strict legal compliances, people have less faith in the firm. The accounts of the firm need not be published. Thus, it is difficult to borrow funds from third parties.
Customer Reviews For Partnership Accounting
Partnership Accounting FAQ's
The compliance for partnership firms mainly includes the income tax return filing unlike the corporate entities like the LLP and the company as they have to make income tax return filings as well as the annual return filing.
For filing the returns of a Partnership firm Invoices of sales and the purchases during a year, expenses invoice, bank statements of the partners, TDS return filed copy, GST returns filing copy is required.
The partnership deed contains all the Terms and conditions of the Partnership. It regulates the rights and the duties of each partner making the partnership deed a very crucial document.
The partnership firm and the partners of this firm are considered to be the same. In the case of the partnership firms, the liability of the partners is also unlimited and all the partners are jointly responsible for the liabilities of the firm.
Irrespective of the turnover and the profit or losses made by the partners, the partnership is required to file income tax returns.
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