A partnership firm is one of the most traditional forms of business registration. It involves two or more individuals coming together to conduct business and agree to share the profits or losses. It is a simple and common business structure, especially for MSMEs, governed by the Indian Partnership Act of 1932. Initially, partnership was the only option available for partners until the LLP Act was introduced in 2010, allowing for limited liability partnerships.
The firm’s name should be unique and must not be similar to any existing firm in the same line of business. It should not include terms related to government authorities, eminent personalities, or any names that require prior government approval.
A partnership deed is an agreement that can be either registered or unregistered. It specifies each partner's investment, rights, duties, and profit-sharing ratios. Although oral agreements are valid, a written deed is highly recommended to prevent future disputes.
No, registration is not mandatory. As per the Indian Partnership Act, executing a partnership deed is sufficient to start the business. However, unregistered partnerships come with limitations.
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