Overview
Partnership is a group of people who come together to start something as a team for the purpose of managing a business enterprise and sharing its profits or losses. A partnership can be between a minimum of two people or more where people come together to pool skills, resources, and money. The profit and loss faced by a Partnership Firm is divided between the partners of the firm as per mutually agreed Partnership Deed.
In the Partnership each partner has full power to act for the firm in carrying on its business thus, partners act as proprietors and also as agents of other partners. Each partner is individually liable to third persons for the obligations incurred for the firm but is also equally liable for obligations incurred by other partners when they are acting within the scope of the firm’s business.
Unlike Companies, a Partnership Firm does not have a legal entity separate and apart from its partners. Therefore earnings of the partnership is taxed as personal earnings of the partners. Partnership Firm does not have perpetual existence which means the death of all partners will result in dissolution of partnership. Agreement is most essential thing for starting business in partnership which will help partners to get a decision for any circumstance that may arise in future. In India, partnership is not necessarily required to be registered, however to enforce its rights, the Partnership Firm must be required to be registered.
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