What is a partnership firm?
Of two or more than two people who want to do business together or want to start a company together, then they can register a partnership firm. A partnership firm is governed by the Partnership Act 1932.
The requirement of a partnership firm
- Minimum two individuals as directors
- The maximum number of partners cannot exceed 20.
- The partnership deed is the governing document of a partnership firm Payments and tax filing will be in the name of the partnership firm.
Disadvantages of a Partnership firmUnlimited liability of the owners - Unlimited liability is also applicable in the case of a partnership firm. If the firm has taken a loan for the business, or the firm has any liability on, or there are payments dues to the suppliers, all these can be recovered from the owner's personal wealth.
Who should start a partnership firm
- Small family business
- Trustworthy partners.