Partnership Firm Theory

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2. CHAPTER -7
INCOME FROM PARTNERSHIP FIRM
WHAT IS PARTNERSHIP FIRM
PROCEDURE FOR REGISTRATION OF A PARTNERSHIP FIRM
INCOME FROM PARTNERSHIP FIRM
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3. INCOME FROM PARTNERSHIP FIRM
What is partnership firm
CHAPTER -7
A Partnership firm refers to a business
house which is owned by two or more
people jointly. If any partner become
insolvent or dies, the partnership firm gets
dissolved.” To make a partnership firm there is
need to make a partnership between two or
more people.
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4. CHAPTER -7
INCOME FROM PARTNERSHIP FIRM
Advantages / Disadvantages of partnership FIRM
Advantages
• Easy to Form(No legal formalities)
• Availability of Large resources
• Flexibility in operation
• Better Decision
• Sharing Risk
Disadvantage
• Limited Capital
• Absence of Legal Status
• Dissolution
• Mutual Trust
• Sharing of Profit
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5. CHAPTER -7
INCOME FROM PARTNERSHIP FIRM
Procedure for registration of a partnership firm
The law relating to a partnership firm is
contained in the Indian Partnership
Act, 1932.
• As per Section 58 of the Act, a firm may be registered at any time by filing an application with
the Registrar of Firms of the area in which any place of business of the firm is situated.
• It is not compulsory to get registration of firms. It is optional for partners to set the firm registered
and there are no penalties for non-registration.
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6. CHAPTER -7
INCOME FROM PARTNERSHIP FIRM
Procedure for Registration of a partnership firm
Make an Application
Prescribe Form for Incorporation in FORM 01 and
Affidavit
Attached Certified copy of Partner ship Deed and
ownership proof of the principal place of business
Submit all Document to the Registrar
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7. CHAPTER -7
INCOME FROM PARTNERSHIP FIRM
Procedure for registration of a partnership firm
When the Registrar of Firms is satisfied that
the provisions of section 58 have been duly
complied with, he shall record an entry of the
statement in the Register of Firms and
issue a Certificate of Registration.
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8. CHAPTER -7
INCOME FROM PARTNERSHIP FIRM
Procedure for registration of a partnership firm
For Examples MR. MANOJ KAUSHAL
and MR.PRASHANT has started a
partnership firm with the name of M/S
PRAMAN SALES. before start the
business they have decided to make a
PARTNERSHIP- DEED
Click here for Partnership deed
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9. INCOME FROM PARTNERSHIP FIRM
Responsibilities of a firm
CHAPTER -7
At the end of year firm has to Maintain
• Profit and loss account
• Balance Sheet
• Profit and Loss Appropriation Account
• Computation
• Depreciation
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10. CHAPTER -7
INCOME FROM PARTNERSHIP FIRM
Some Accounts requiring consideration while preparing the final
account. These are
• Partner’s Capital Accounts
• Interest on Partner’s Drawings
• Interest on Partner’s Capitals
• Salary or Commission to Partners
• Interest on Partner’s Loan
• Capital Ratio and distribution of Sharing Profit
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11. INCOME FROM PARTNERSHIP FIRM
Assessment of Firm
Net Profit as per Profit and Loss Account
Add: In-admissible Expenses
Less: Admissible Expenses
Less: Income credited to P & L A/c but taxable under other heads
CHAPTER -7
Less: Maximum amount allowed on account of Remuneration U/s 40b
Less: Deduction chapter VI A
Net Taxable Income from Partnership Firm
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