Types of Partnership Firms

A partnership firm is created when two or more persons unite together and execute their Ideas with available resources to establish a business known as Partnership Firm. There has been a classification of Partnership Firms to choose from for your own financial gain.

Registering a Partnership Firm is also a necessary step to gain Legal Recognition and access Benefits. Under The Indian Partnership Act,1932, a Partnership Firm has to register itself to the ROF (Registrar of Firms). But The Partnership Act also claims that it is not mandatory to register your Partnership Firm but one can gain many advantages after Registering.

Table of Content

What is a Partnership Firm?
Types of Partnership Firm
Benefits of Partnership Firms.
Conclusion
FAQ’s

What is a Partnership Firm?

When two or more people tie up completely,mix their Ideas and specify their Aim to Profit to Operate a Business is known as a Partnership Firm. A Partnership Firm needs to be Registered to ROF (Registrar of Firms) under The Indian Partnership Act,1932.

The Indian Partnership Act,1932 governs and regulates all the Partnership Firms in India. The Act implies that it is not compulsory to register a Partnership Firm but you can gain access to a ton of benefits such as Legal Recognition,Right to take action,Sharing of loss and profit etc.

Types of Partnership Firm

There are four types Partnership Firms that are as follows:

General Partnership.
Limited Partnership.
Limited Liability Partnership.
LLC Partnership.

1. General Partnership: When two or more people combine their ideas and work together on a Business as co-workers,It is a General Partnership. They may not have an equal share of the company; it solely depends on the Partnership agreement created at the beginning of the Partnership. General Partnership is a low cost form of Partnership as there are multiple Investments from the Partners. In this type of Partnership, the partners have Individual Independence but they also have liability towards the Firms of bearing any loss/debt or legal obligations.

2. Limited Partnership: Limited Partnership is more of a formal Partnership than General Partnership. The General Partners are responsible for managing the overall business of the Firm. On the other side, these General Partners are supported by the limited Partners who provide money to run the Partnership but are not fully engaged in managing the business. Limited partners do not take part in decision making neither they share the responsibilities of running the business on their own. The Limited Partnership model allows Legal Protection to the Limited Partners to safeguard themselves from any exterior hindrances and from the liability of General Partners.

3. Limited Liability Partnership: Limited Liability Partnership is a mixture of General and Limited Partnership in which all the Partners can actively participate in managing the Business and also safeguard themselves from any hindrances. They are only liable to take responsibility for their own actions. This type of Partnership is relevant to professionals who combine their expertise and resources together to run a Business.

4. LLC Partnership:In this type of Partnership Firm, Partners are protected from taking any Personal Responsibilities and Liabilities. LLC Partnerships contain two or more partners or members. It compromises the characteristics of corporations and a partnership model of Business.Please note down that rules of LLC Partnership may vary from country to country.

Benefits of Partnership Firms

Legal agreement: It is a written document which signifies the attributes of the members towards the Firm which is created with the mutual understanding of each of the partners,who have the same aim of benefit of the company including their own profit.
Sharing Ownership: A Partnership Firm enables the division of the Ownership of the Firm between the members who have Invested Financially in operating the Firm.
Mutual decisions: Partnership Firm consists of the word Partnership which refers to two or more people exchanging their Ideas and are working for the same aim with collective understanding, then each of the Partners have the right to stand on mutual decisions for the firm.
Profit Sharing: A Partnership Firm allows to share the profit equally between the partners as Partnership Deed has been signed with a collective agreement at the beginning of the Partnership, In which sharing of profit and loss is mentioned.

Conclusion

Partnership Firms are more successful as compared to sole owned firms as it involves multiple partners with Investments,numerous Ideas,diversion of management and sharing of Profit and Loss.Partnership Firm Registration should also be completed for future benefits and for legal Recognition.
You can Obtain more information about Partnership Firms and the process of Registration by Professional Utilities hassle free.

Why Professional Utilities?

At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.

One Stop Corporate
Solution

PAN India
Services

Free Expert
Assistance

Google Verified
Business

Dedicated Support
Staff

Money-Back
Guarantee

Frequently Asked Questions

What is a Partnership Firm?

When two or more people tie up completely,mix their Idea and specify their Aim to Profit to Operate a Business is known as a Partnership Firm.

What are the types of Partnership Firms?

General Partnership,Limited Partnership,Limited liability Partnership and LLC partnership.

What is Partnership Firm Registration?

Partnership Firm registration is a process of registering a partnership firm in India. It includes registration of the firm with the registrar of firms of the place where the firm is based.