Partnership Firm

A partnership is an agreement between two or more people to finance and operate a business. Partnerships, unlike sole proprietorships, are entities legally separate from the partners themselves. In a general partnership, however, profits and losses flow through to the partners’ tax returns.

There are two types of Partnership firms, registered and un-registered Partnership firm. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm with the registrar of firm due to some advantages.

Minimum Requirements
Who can be a partner?
Annual Compliances
Capital Required

About Partnership Firm

  • Minimum Requirements

    A minimum of two Persons is required to start a Partnership firm. A maximum number of 20 Partners are allowed in a Partnership firm



  • Who can be a partner?

    The Partner must be an Indian citizen and a Resident of India. Non-Resident Indians and Persons of Indian Origin can only invest in a Proprietorship with prior approval of the Government of India

  • Capital Required

    Capital is the initial amount in cash or kind contributed by the partners to start the business. It is not necessary for each partner to contribute equally to the capital. Contribution is based on the agreement between the parties.

  • Annual Compliances

    Partnership firm will have to file their annual tax return with the Income Tax Department. Other tax filings like service tax filing or VAT/CST filing may be necessary from time to time, based on the business activity performed. However, annual report or accounts need not be filed with the Ministry or Corporate Affairs, which is required for Limited Liability Partnerships and Companies.

  • Can a minor be a Partner in Partnership Firm?

    No, a minor cannot become a partner. However, your minor son can be admitted to the benefits of the partnership firm. He can share the profits of the partnership business with the consent of the other partners. He can also access, inspect and copy the accounts of the firm. Though the minor is not personally liable for the losses of the firm, his share in the partnership business is liable for the losses incurred.

  • How to open a bank account for a partnership firm?

    To open a bank account for a Partnership firm, a registered Partnership deed along with identity and address proof of the Partners need to be provided.



  • Is Audit required for a partnership firm?

    It is not necessary for Partnerships to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criterion


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Compliances Under GST

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Input Tax Credit Mechanism in GST

Understanding GST