Partnership Firm

Partnership is “the relation between persons who have agreed to share the profits of the business carried on by all or any one of them acting for all”. It is governed by the Indian Partnership Act 1932 and can have maximum 20 members. A partnership deed is prepared that details the amount of capital each partner will contribute to the partnership. A partnership firm may or may not be registered with Registrar of Firms.

Registration provides some legal protection to partners in case they have differences between them. Until a partnership deed is registered with the ROF, it may not be treated as legal document. Active partners take part in day-to-day operations of the business, in addition to investing in it. Active partners are entitled to a share of the enterprise's profits and can draw salary.

A partnership is also allowed to purchase assets in its name.a separate Permanent Account Number (PAN) is allotted to the partnership. Partners of the firm have unlimited business liabilities which means their personal assets can be attached to meet business liability claims of the partnership firm.