Partnership firms is among the most common types of business entity in India where in two or more persons join together to undertake a profit for business. Under Income Tax Act, a partnership firm is defined as “Persons who have entered into a partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name". Partnership firms are required to file income tax return in form ITR 5 each financial year. To file the income tax return of a partnership firm, book of accounts must be maintained and tax audit may have to be obtained based on various criteria s. We provides a comprehensive compliance and income tax return filing service for partnership firms.
A Partnership is a business operated by two or more partners. There is no federal regulation that governs how Partnerships are formed; each state has its own rules on the matter. The exact nature of the Partnership will depend on the Partnership agreement, which should be drafted with the help of an attorney and should comprehensively regulate business matters to avoid misunderstandings down the line.
Partnerships can be very similar to Sole Proprietorship in the sense that the business is not necessarily an independent entity; in the simplest form of Partnership, all partners contribute capital and all are fully liable for business debts. Each partner will pay taxes separately, although information about income and expenses is filed for the Partnership as a whole. The Partnership Agreement is merely a way to share Sole Proprietorship. However, other variants of Partnerships may differ in how liability or capital contributions are structured.