What is a General Partnership?
A Partnership Firm is a popular form of business structure in which two or more individuals manage and operate a business in accordance with the terms and goals set out in the partnership deed. This entity is owned, managed and controlled by an association of people for profit. Partnership registration is relatively easy and is prevalent among small and medium sized businesses in the unorganized sectors. However, this structure is thought to have lost its relevance due to the introduction of LLPs. Although partnerships provide unlimited liability, it is still a sensible option for certain businesses like home businesses because of low costs, ease of setting up and minimal compliance requirements. Partnership firm registrations are optional.
Why Partnership Firm?
- Easy to start as no cumbersome legal formalities are involved
- Annual filing not required
- Has minimum compliance requirement
Advantages of a Partnership
Minimal Compliance
Partnerships need not appoint auditors if unregistered. They also need not file annual accounts with the registrar until registration.
Easy to Start
Registration for partnership firms are optional, but once done, it does bring a few advantages like, enabling you to file suits in courts against another firm or partners within the firm, etc.
Relatively Inexpensive
Due to minimal compliance requirements, a partnership firm is cheaper to start. This is why home businesses prefer this entity.
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