Starting a Partnership Firm in Bengaluru:the complete understanding
Introduction of partnership firm in bengaluru
Starting a partnership firm in Bengaluru, or anywhere in India, involves several steps and legal procedures. In this comprehensive guide, we will walk you through the process of establishing a partnership firm in Bengaluru. This guide will cover key aspects such as defining a partnership firm, its features, registration procedures, documentation, and compliance requirements. We will also touch upon important considerations to ensure a smooth and successful partnership venture.
1. Understanding Partnership Firms
Definition: A partnership firm is a form of business organization where two or more individuals come together to operate a business with shared ownership, responsibilities, and profits. This business structure is regulated by the Indian Partnership Act, 1932.
- Mutual Agreement: Partners mutually agree to carry on a business and share its profits and losses.
- Ownership and Management: Partners have equal ownership and actively participate in managing the firm.
- Unlimited Liability: Partners have unlimited personal liability for the firm’s debts and obligations.
- No Separate Legal Entity: Unlike companies, partnership firms do not have a separate legal identity from their partners.
- Registration: While not mandatory, registering a partnership firm provides legal benefits.
Types of Partnership Firms:
- General Partnership: Partners equally share profits and losses and participate in the management.
- Limited Liability Partnership (LLP): Provides limited liability to partners and has a separate legal identity.
- Registered Partnership: A partnership firm registered with the Registrar of Firms, offering legal advantages.
2. Choosing a Business Name
Legal Requirements: Choose a business name adhering to the rules specified by the Companies Act, 2013. The name should not resemble an existing registered firm’s name.
Availability Check: Conduct a name availability search with the Registrar of Firms to confirm your chosen name is unique and available for registration.
3. Partnership Deed
Importance: A partnership deed is a legal document outlining the partnership’s terms and conditions, including roles, responsibilities, profit-sharing, and dispute resolution mechanisms.
Contents: A partnership deed typically includes:
- Names and Addresses: Details of all partners.
- Business Name: The firm’s name.
- Nature of Business: Description of business activities.
- Capital Contribution: Amount contributed by each partner.
- Profit Sharing: How profits and losses will be distributed.
- Management: Roles and responsibilities of partners.
- Withdrawal Rules: Conditions for withdrawing capital.
- Admission and Retirement of Partners: Procedures for adding or removing partners.
- Dispute Resolution: Mechanisms for resolving disputes.
- Duration of Partnership: Whether it’s a fixed-term or at-will partnership.
4. Registration Process
While not obligatory, registration offers legal recognition and advantages:
- Legal Recognition: A registered partnership firm gains legal status.
- Dispute Resolution: Registered firms can access legal remedies for dispute resolution.
- Credibility: Registered firms are considered more credible by financial institutions.
Document Checklist: To register a partnership firm, prepare the following documents:
- Partnership deed on non-judicial stamp paper.
- Application for registration (Form 1).
- Specimen of an affidavit.
- Proof of ownership of the principal place of business.
- Draft Partnership Deed: Prepare a comprehensive partnership deed.
- Purchase Stamp Paper: Acquire the necessary non-judicial stamp paper for the deed.
- Notarize and Stamp Deed: The deed should be notarized and stamped.
- Apply for Registration: Submit the application (Form 1) to the Registrar of Firms with the partnership deed, affidavit, and other documents.
- Pay Registration Fees: Pay the prescribed registration fees.
- Certificate of Registration: Upon approval, the Registrar issues a Certificate of Registration.
5. PAN and TAN Registration
Permanent Account Number (PAN): PAN is a 10-digit alphanumeric number issued by the Income Tax Department. It’s crucial for tax compliance and financial transactions.
Tax Deduction and Collection Account Number (TAN): Obtain TAN if your business deducts or collects tax at the source. Partnerships must have a TAN if applicable.
6. Compliance Requirements
Goods and Services Tax (GST): Register for GST if your annual turnover exceeds the threshold. GST is vital for collecting and remitting taxes on behalf of the government.
Other Regulatory Requirements: Depending on your business type, you might need specific licenses or permits, such as:
- Trade License
- Shops and Establishments License
- Fire Safety License
Annual Filings: Partnership firms typically need to file annual income tax returns and GST returns if applicable.
7. Business Bank Account
Importance: Open a dedicated bank account in the firm’s name. This simplifies financial transactions and ensures transparency.
Choosing a Bank: Research different banks, considering factors like account types, fees, and online banking services.
8. Licenses and Permits
Trade License: If your business operates from a specific locality, obtain a trade license from the local municipal authority.
Other Permits: Depending on your business, you might need additional permits or licenses. Research industry-specific requirements.
9. Partnership Firm and Taxes
Income Tax: Partnership firms are taxed at 30% on their total income. Each partner is individually taxed based on their share of the profits.
GST: If your turnover surpasses the threshold, collect and remit GST. Regularly file GST returns to stay compliant.
10. Partnership Firm Agreement
Dissolution: In case of partnership dissolution, the deed should outline settlement procedures, including asset and liability division.
Amendments: Any changes to the partnership deed should be documented and agreed upon by all partners. Register amendments if they alter the fundamental structure.
Best Partnership firm Service Providers in Bengaluru
AURIGA ACCOUNTING PVT. LTD. || INDIA
Auriga Accounting Private Limited is a technology driven platform which provides legal & financial services through its team of professionals. Auriga Accounting Private Limited provide expert services which can get your new business off to a flying start. We are Compliance and finance officers for your business. Here you get simple and affordable online company registration and range of essential services. A world class technology – driven platform, offering end to end service from startup to well established firm.
BUSINESS SOLUTION’S || ACCOUNTING SERVICE’S || BUSINESS CONSULTANT
A business agency is a company such as, We Auriga Accounting, that provides a specialized service to their clients. Often, agencies act on behalf of another company, group or individual to manage a segment of their business.
No. 01 CA Firm Company in INDIA is Auriga Accounting.Hassle Free Services. We Got 17+ National Awards & 5+ International Awards.
Some key aspects of business services include:
1.BUSINESS REGISTRATION || 2.TAX REGISTRATION. || 3.COMPLIANCES
why You should Choose Auriga Accounting for partnership services ?
Choosing the right accounting service provider is crucial for the financial health and success of any business. Auriga Accounting stands out as an excellent choice for Partnership services due to a multitude of reasons. They are;
1.Tax Planning: Expert tax planning services help optimize your partnership’s tax liabilities, maximizing your savings and minimizing tax-related risks.
2.Strategic Advice: Experienced advisors offer strategic insights and financial advice to enhance your partnership’s profitability and growth prospects.
3.Cost-Effective: Auriga Accounting offers cost-effective partnership services, allowing you to focus your resources on core business activities.
4.Time Efficiency: Outsourcing partnership services to Auriga Accounting saves you valuable time, enabling you to concentrate on business operations and growth strategies.
5.Data Security: Stringent data security measures ensure the confidentiality and safety of your partnership’s financial information.
In conclusion, Auriga Accounting stands out as a leading choice for Partnership services due to their unwavering commitment to accuracy, efficiency, and client satisfaction. By choosing Auriga Accounting, businesses gain not just a service provider, but a dedicated partner invested in their financial success. With a wide array of services, a client-centric approach, and a reputation for excellence, Auriga Accounting provides the essential support that businesses need in their financial management journey.