What is a partnership firm?

Partnership is a common form of business. Two or more people come together to carry on a business and share the profits and losses. Liability of the partners in a partnership firm is joint and several.

A partnership firm is not a separate legal entity distinct from its memebers. It is merely a collective name given to the individuals composing it. Hence, unlike a company which has a separate legal entity distinct from its members, a firm  cannot possess property or employ servants, neither it can be a debtor or a creditor. It cannot sue or be sued by others.

What are the Documents required for Partnership Firm Registration?

  • Affidavit declaring intention to become partner
  • Copy of PAN card of the partners
  • Rental or lease agreement of the property on which the business is set
  • Copy of Aadhaar Card/ Voter identity card
  • Form No. 1 (Application for registration under Partnership Act)
  • Aadhar card [director only]
What is the Process for Partnership Firm Registration?
  • A deed of partnership is required to be made out and registered under the Indian movable property Act together with other movable properties involved.
  • This is the Prescribed Registration Form for Incorporation of a firm. It should be filled and along with documents to be submitted to ROF.
  • Submit the duly filled Form 1, stamped partnership deed and Lease agrrement to RoF(Registrar of Firms)
  • After verification of all Submitted documents, RoF will issue Certificate of Registration

Advantages

Sharing of risk
Risk is shared amongst the partners.
Better Management
Better management of business can be done as the number of persons managing the business are more.
Larger resources
More resources can be procured from all the partners when compared to sole proprietorship.
Ensures secrecy
The statement of accounts of the firm need not be published and this ensures secrecy.

Disadvantages

Cannot access public funds
A partnership firm cannot invite funds from public.
Unlimited liability
Limited liability concept does not apply in case of a partnership firm. All the partners are jointly and severally liable for the liabilities of the firm.
Lead to dissolution
A partnership firm does not exist for an indefinite period of time. The death, insolvency or lunacy of a partner may lead to dissolution of the partnership firm.
Separate legal status
A partnership firm does not have a separate legal status i.e., a firm cannot own property.

FAQ ?

How many persons are required to incorporate a public limited company?

A Director and a nominee are required to incorporate a OPC.

Who is a nominee in the context of OPC?

A nominee is a person who takes over the company in the event of death or incapacity of the promoter.

How to intimate ROC that the OPC has exceeded the threshold limits and require conversion into private or public company?

The OPC shall inform ROC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company.

Is there any threshold limit for an OPC to mandatorily get converted into either private or public company?

In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company.

What are the requirements to be a director or nominee in a OPC?

Only a natural person who is an Indian citizen and a resident in India is eligible to incorporate a One Person Company or be a nominee member.

What is the time limit for filing INC5?

Form INC-5 shall be filed within sixty days of exceeding threshold limits

What if a member of an OPC becomes a member in another OPC by virtue of being a nominee in that other OPC?

In such a case, such person shall meet the criteria of being a member in only one OPC within a period of one hundred and eighty days i.e., he/she shall withdraw his membership from either of the OPC’s within one hundred and eighty days.

What are the requirements with regard to the company’s name?

Company’s proposed name should be unique i.e., it should not be identical to any existing name. Names that infringe others’ rights, trademarks or patents are likely to be rejected by ROC.

Is there any concept of area based exemption under GST?

There will be no area based exemptions in GST.