A partnership firm is a closely held business. It is not required by law to share its performance and position with others. Thus, all knowledge about the firm is restricted to only the partners of the firm. Partnership is an association of two or more persons to carry on a business in the capacity of co-owners. Each such person is called a partner. All the partners share the profits and losses in proportion of their respective ownership, or as agreed between them.
Advantage 1 Ease of Formation: It is easy to form a partnership. No elaborate legal procedures are needed to bring a firm into existence. There is no need for registering a firm. Even when required, a firm can be registered quite easily. Likewise, one can close down a firm relatively easily.
Advantage 2 Financial Resources: Partners can pool their resources and expand the financial base of a firm. Creditors would be more willing to extend credit facility to a firm based on the reputation of partners and the soundness of business carried out by the partners.
Advantage 3 Talent: can be Pooled: Partners can divide work among themselves, depending on their individual skills, and talents. This helps the firm to grow quickly.
Advantage 4 Flexibility: Partners can carry out day-toÂday activities in a flexible way. The nature and place of business can be altered at will. New partners can join a firm when required. Partners can switch gears and change hats depending on situational requirements. Capital infusion, profit sharing, pricing policies, etc., can be altered in sync with market demands. It has freedom to undertake any activities which is legally blessed.
Advantage 5 Reward for Effort: Partners can work jointly and severally for improving business and get adequately rewarded. They can oversee work from close quarters and run the show fairly independently. Since there is no separation of ownership from management, everyone can work hard, and take the firm to commanding heights.
Advantage 6 Informed, Balanced and Careful Decisions: Partners can bring their skills, knowledge, and expertise to the table. Since they are jointly held responsible for losses, they are compelled to take a careful, cautious path. They are forced to take all the necessary steps to put reckless, careless decisions to rest.
Advantage 7 Secrecy: Partners can keep business secrets close to their chest. They need not reveal them to anyone. The firm need not even get its accounts published and audited.
While dealing with firmâ€™s transactions, each partner is entitled to represent the firm and other partners. In this way, a partner is an agent of the firm and of the other partners.
A firm or company established between two or more partners with the goal of earning profit is called as a Partnership Firm.It is not compulsory to register a partnership firm but there are added advantages if a partnership firm is registered.Partnership deed is the legal document which is created to form a partnership firm.
In partnership firm, the liability of partners is unlimited. Just as in proprietorship, the partnersâ€™ personal assets may be at risk if the business cannot pay its debts.
It is a unique 10-digit alphanumeric identification that is issued to each and every taxpayer, may it be Business, Individual, HUF(Hindu Undivided Family), Trusts, Foreign Citizens and more. This PAN number and the card is issued by the Income Tax Department which is of extreme importance as identity form. This card is used by the Income Tax department to keep a check on the transactions that can carry a taxable component. PAN card id required as evidence/proof/identity and even in transactions that is associated with a high value.
A 10 digit alphanumeric number is issued by the Income-tax department which is known as Tax Deduction Account Number or Tax Collection Account Number(TAN). Any person who is responsible for deducting tax at source (TDS) or who are required to collect tax at source (TCS) needs to have a TAN.