What is a Partnership in a Startup?

A partnership in a startup is when two or more individuals join forces to run and manage a business. The partnership structure is defined by a partnership deed that outlines the terms and conditions of the partnership, such as profit-sharing, responsibilities, and decision-making processes. This structure offers flexibility, shared financial and operational responsibilities, and the pooling of expertise to grow the business.

Key Features of a Partnership:

• Two or more partners are involved in the business.
• Profits and liabilities are shared according to the partnership agreement.
• Simple, cost-effective structure to set up.
• A partnership deed specifies roles, responsibilities, and profit-sharing.
• Joint liability means partners are collectively responsible for the business's debts and obligations.

How to Set Up a Partnership for a Startup in India?

Step 1: Choose Your Partners Wisely

• Select partners who align with your business values and vision.
• Ensure they bring complementary skills to strengthen the business.

Step 2: Draft a Partnership Deed

• Include key details like the business name, profit-sharing ratio, roles, dispute resolution, and exit strategy.

Step 3: Register the Partnership Firm

• Apply for registration with the Registrar of Firms.
• Submit the partnership deed and necessary documents like identity and address proofs.
• Obtain a PAN card for the business.

Step 4: Apply for Necessary Licenses

• Obtain GST Registration (if applicable).
• Get a Shop and Establishment Act License, Professional Tax Registration, and any industry-specific licenses.

Step 5: Open a Business Bank Account

• Open a current account in the business’s name with necessary documents (PAN card, partnership deed, etc.).

Step 6: Maintain Books of Accounts

• Keep detailed financial records and file Income Tax Returns and GST returns (if applicable).