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Setting up Your Partnership Business

PARTNERSHIP BUSINESS

The simplest form of business organization i.e. Partnership Business is also simple to set up. All you need is a Partnership Agreement and it is done. But, you need your agreement well drafted and all your tax registrations done at one stop, right? At DCS we offer you the complete package for registration of your Partnership Business at all Tax Forums. Not only this, we also promise you a complete guidance of the activities best for you. You shall have direct contact with the Team Leader engaged in your project to have all the information and update you require. We also ensure Post Incorporation Support which encompasses a wide array of services.


Drafting your Partnership Deed

Though not mandatory, yet a Partnership Deed is an important tool to save you from future disputes. With your basic details we shall draft a clear unambiguous Partnership Deed which will demonstrate the mutual rights & duties of the partners inter se and those with the firm. Rest assured, you will have no disputes regarding the terms of the partnership.

PAN/TAN Registration

Obtaining PAN has been made inevitable by the Income Tax Department for any Partnership Firm operating in India. Also, you get liable to deduct taxes at source very soon after you start your full-fledged operation. Thus TAN also becomes inevitable for you. In your association with DCS you don�t have to go anywhere else for these services auxiliary to the start up of your Firm. In addition to your Firm�s start up we will also look into the PAN & TAN Registrations with the Income Tax Department.

Service Tax Registration

Once you operate in the Service Sector you have to pay tax on the services provided by you under the Service Tax Laws. Thus for this you need to be registered as an assessee with the Service Tax Department. Along with other registration and incorporation services we also help you in registering with the Service Tax Department.

Sales Tax Registration

For the firm engaged in sale of goods, the trader firm has to be registered with the Sales Tax Department of respective state. We help you obtain the Sales Tax Registration without any complications.

Local Registrations (Trade License, etc)

We provide assistance in your registration with the Professional Tax Department, obtaining Trade License and other local registrations and other basic compliances to continue uninterrupted operation after your set up.



Frequently Asked Questions

What are the basic tax numbers that are generally required to for every business?

In India, basically there are two types of tax numbers, which are outlined below:

  • General Tax Numbers: Tax Numbers like PAN & TAN are generally required to be obtained by all types of business.
  • Specific Registration: These registration are required based on the nature of business carried by the organization for in case of business of trading, Value Added Tax number will be required subject to fulfillment of certain conditions .

What are tax numbers that are based on the nature of the business?

Following tax numbers are required based on the nature of the business:

  • Service Tax Number: For providing specified taxable services.
  • Value Added Tax Number: For making sales within particular state.
  • Central Sales Tax Number: For making inter-state sale of goods.
  • Excise Duty Number: For manufacturing excisable goods.
  • Import & Export Number (IEC): For effecting import and export of goods and services.

It is necessary for all the businesses carrying any of the aforesaid activity, to procure this number; it has to satisfy other eligibility criteria.

Which form of business is easy to close?

Partnership and Sole Proprietorship forms of business are the least regulated form of business and therefore it is most easy to close them. The closing does not involve the permission of any judicial authority like High Court.

What is a Company?

Company is an association of persons registered under the Companies Act 2013. It is a separate legal entity distinct from the persons who own or manage it.

What are the advantages of a Company?

  • Liability of the shareholders is limited to the extent of face value of shares held by them. Thus the investors have a sense of security while investing.
  • The management hierarchy of a Company is very clearly defined. Hence it becomes easy to appoint, retire or remove directors.
  • There are more regulations governing this form of business than the others. Hence, there is more public confidence.
  • A Company enjoys high credibility as the books of accounts and other documents are available for public vigilance.
  • The winding up of the Company is also regulated by law. Hence, it becomes easy to dispose off this form of business.
  • The status of this form of business is comparatively higher compared to the other forms of business.
  • A company has a distinct entity from its owners. Hence it can sue or can be sued in its own name.

What is a Private Limited Company?

A Private Limited Company is a company limited by shares. The Companies Act, 2013 requires the minimum paid up capital of Rs. 100000/- for a Private Limited Company and also imposes a certain restrictions such as:

  • restricts the right to transfer its shares
  • except in case of One Person Company, limits the number of its members to 200
  • Public Limited Company
  • prohibits any invitation to the public to subscribe for any securities of the company

What is a One Person Company?

The concept of One Person Company (OPC), is a new form of company introduced by the Companies Act, 2013 which enables the entrepreneur working as a Sole Proprietor enter the Corporate Framework. It combines the benefit of both Sole Proprietorship and Company form of businesses.

What is a Public Limited Company?

A Public Limited Company is limited by shares with no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The shareholders liability is limited to the extent of the unpaid amount of the face value of shares and the premium thereon in respect to shares held by a shareholder. It should have a minimum paid up share capital of five lakh rupees.

What is Authorized Capital?

Authorized Capital or Nominal Capital means such capital as is authorized by the memorandum of a company to be the maximum amount of share capital of the company. It can be altered from time to time.

What is AOA?

The Articles of Association contain the regulations for the management of the Company. This document contains rules, regulations and bye-laws for the general administration of the company. The articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as may be applicable to such company.

What is MOA?

Memorandum of Association is the document that states the name, address of registered office, objects of the company and any other incidental matter. This is accessible to the public. The memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E in Schedule I as may be applicable to such company.

What is DIN?

Director's Identification Number is the unique identification number issued by the Government to the individuals. It is mandatory for every individual to obtain DIN before being appointed as a director.

Who can apply for DIN?

Every individual, intending to be appointed as a director of the company, can file an application for allotment of DIN.

What is a valid address proof and ID Proof for DIN?

  • Address Proof: Passport, election (voter identity) card, and ration card, driving license, electricity bill, telephone bill or aadhaar shall be attached as address proof and should be in the name of applicant only.
  • Identity Proof: Income Tax PAN Card is the mandatory proof of ID for Indian Nationals. In case of foreign nationals, Passport is the mandatory ID proof.

Is DIN and PAN related?

Yes, DIN & PAN are related. The PAN Card is the mandatory proof of identity while applying for DIN. Moreover, the DIN authorities verify the details of the individual from the PAN database.

Who allots DIN? What is the validity of DIN?

The Central Government (Office of Regional Director (Northern Region), Ministry of Corporate Affairs, NOIDA) allots the DIN. The DIN is valid for the lifetime of the individual. Also, there is no requirement of renewal of DIN.

What are the requirements to be a Member or Nominee in an OPC?

Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.
Further, minors can neither be members or nominees in an OPC.

What is LLP?

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.

What are the salient features of LLP?

  • LLP is a body corporate and a legal entity separate from its partners;
  • The LLP will have perpetual succession;
  • The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act 2008;
  • The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP which may be of tangible or intangible nature or both tangible and intangible in nature;
  • Indian Partnership Act, 1932 shall not apply to LLP.
  • The mutual rights between the partners of LLP are governed by the LLP agreement.

What are the advantages of forming an LLP?

  • Renowned and accepted form of business worldwide.
  • Low cost of Formation.
  • Easy to establish.
  • Easy to manage & run.
  • No requirement of any minimum capital contribution.
  • No restrictions as to maximum number of partners.
  • LLP & its partners are distinct from each other.
  • Partners are not liable for Act of partners.
  • Less Compliance level.
  • No exposure to personal assets of the partners except in case of fraud.
  • Less requirement as to maintenance of statutory records.
  • Less Government Intervention.
  • Easy to dissolve or wind-up.
  • Professionals can form Multi-disciplinary Professional LLP, which was not allowed earlier.

What are the qualifications for becoming a partner?

Any individual or body corporate may be a partner in a LLP. However an individual shall not be capable of becoming a partner of a LLP, if :

  • has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
  • is an undischarged insolvent; or
  • he has applied to be adjudicated as an insolvent and his application is pending.

Who can be a 'Designated Partner'?

Only an individual can be appointed as a 'Designated Partner' and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

What is Designated Partner Identification Number (DPIN)?

Designated Partner's Identification Number (DPIN) is a eight digit numeric number granted to any person intending to be appointed as Designated Partner for the purpose of its identification, on the lines similar to Director's Identification Number (DIN) required for Directors in case of Companies. Every Designated Partner is required to have atleast a provisional DPIN for forming a LLP.

Is there any difference between Managing & Designated Partner?

Designated Partners are partners who are responsible for managing the compliance under the LLP Act and Managing Partner are partners , who are managing the business of the Firm and therefore it is not necessary that a Designated Partner is also a Managing Partner & vice versa.

Can any partnership firm be a partner in the LLP?

No, Only an Individual or Body corporate can be partner and the definition of Body Corporate does not include partnership in its ambit. However any partner of the Partnership firm in his individual capacity can hold partnership in LLP.

What do you mean by Contribution?

In reference to LLP, contribution can be termed as, what a partner is contributing towards the Limited Liability Partnership for running of his business. Contribution in case of LLP is alike Share Capital in case of Company.

What is the tax treatment for LLPs?

LLP incorporated in India will be assessed as if it is a partnership firm. LLPs are in the same parlance as partnership firms so far tax provisions are concerned and therefore Minimum Alternate Tax and Dividend Distribution Tax will not be applicable for LLP.

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