by Audit Analyst | Jul 5, 2025 | Partnership Firm
1. Joint Liability of Partners Partners in a firm are jointly responsible for the obligations of the business. All partners are equally liable for debts incurred by the firm. Creditors can sue any one or all partners for recovery. Each partner must ensure proper...
by Audit Analyst | Jul 4, 2025 | Partnership Firm
Growth of SMEs and Informal Sector India’s economic base includes a vast number of unorganized and small businesses, where partnership firms remain the preferred structure. Partnerships are easy to form and manage without heavy compliance Ideal for local businesses,...
by Audit Analyst | Jul 4, 2025 | Partnership Firm
Income Tax Dues Partnership firms are subject to income tax under the Income Tax Act, 1961. Flat income tax rate of 30% on net profit, plus cess and surcharge Must file ITR Form 5 annually, regardless of profit or loss Tax audit is mandatory if turnover exceeds ₹1...
by Audit Analyst | Jul 4, 2025 | Partnership Firm
Accounting Treatment of Partner Loans Loans given by partners are recorded separately from their capital accounts in the firm’s books. Credited to a “Partner’s Loan Account”, not the capital account Reflected as a liability in the firm’s balance sheet Repaid...
by Audit Analyst | Jul 4, 2025 | Partnership Firm
Definition of Fixed-Term Partnership A fixed-term partnership is created with a clear time frame agreed by the partners at the time of formation. Duration is mentioned explicitly in the partnership deed Can be for 1 year, 5 years, 20 years, or even 50 years—no...