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Partnership Firm and its Major Compliances

Partnership Firm and its Major Compliances

The partnership firm is a very reasonable alternative to sole proprietorship that allows better access to funds, resources, and manpower efficiently. The partnership is governed by a partnership deed agreement that has to be amended or updated with every change or major event that takes place during the life of the partnership. It may be a change in the distribution of profits or change in capital contribution or addition of new partners or transfer of ownership within partners, death of a partner, etc. All these scenarios need an amendment in the partnership deed to proceed further.

Regulations for a Partnership Firm

Even though the partnership in itself isn’t a legal entity as all the income earned by the partnership is taxed at the individual level, there can be various regulations under which the partnership has to function. Some of these can be termed as Annual Compliances for Partnership Firm as well. These can be listed as follows:-

•          GST Returns

The partnership firm has to file GST returns every month, every quarter as well as every year. This is a statutory requirement for most of the firms irrespective of the business entity formation type. Ideally, Partnership Company Compliance basic package should include GST returns, as it is one of the very primary regulatory requirements.

•          TDS Returns

If a partnership firm has a TAN which is nothing but Tax Deduction Account Number, the firm has the ability to deduct tax at source. This is commonly referred to as TDS. TDS can be deducted for the partners, employees or others who are generating profit/revenue beyond a certain threshold. In the case of TDS deductions, quarterly TDS returns are to be filed by the partnership firm. This kind of Partnership Firm Compliance service might be slightly more costly compared to the basic package.

•          ESI Return

Employees State Insurance Corporation is an employee-focused plan that has to be in place for a partnership firm employing more than 10 employees. Such partnership firms need to have an ESI registration. It also triggers a yearly ESI return filing requirement as part of compliance.

•          Audit Regulations

Proper book of accounts and audit by a professional is triggered as soon as the partnership breaches the threshold of Rs 2 crores of annual turnover. Audit services are included in the advanced Partnership Company Compliance packages.

•          Income Tax Return Filing

The service of income tax return filing is a comprehensive service that most of the partners in the partnership will be looking forward to. Since the partnership in itself is not a legal entity, it might not exactly file a return. However, it might have to file a return with the Registrar of Companies or prepare books for audit with appropriate financial statements and bookkeeping practices. All these services are usually included in the advanced package. However, turnover and volume of transactions can have a significant impact on pricing.

The filing of personal income taxes at the partner’s level is also included. Other services in the advanced Partnership Firm Compliances package may include help in the drafting of partnership deed, setting up legal agreements with different parties based on requirements, hiring of a tax auditor for statutory audit (if required) and many other admin type services.

Neusource Startup Minds is a Business Management Consultant Company, offers the best business services like Proprietorship Firm Compliances, Bookkeeping and Accounting Services, Private Limited Company Registration and many other business services.

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