Nature and Scope of Activities
Professional partnership firms offer services that require professional qualifications, certifications, and adherence to ethical standards set by regulatory councils.

• Common professions include chartered accountants, lawyers, doctors, architects, engineers, and company secretaries
  
• The firm’s business is restricted to providing services in a specific professional domain
  
• Members must possess valid licenses or enrollments with their respective governing councils
  
• Commercial trading or unrelated business activities are usually not permitted
  
• Professional services are often governed by codes of conduct and practice standards
  

Formation and Structure
These firms are usually formed by a group of like-qualified professionals under a partnership deed that outlines roles and responsibilities.

• Must include only professionals as partners
  
• Registered under the Indian Partnership Act or the Limited Liability Partnership (LLP) Act
  
• Requires a partnership deed detailing the nature of services, profit-sharing, and governance
  
• Names must reflect a professional nature and avoid misleading business terms
  
• Some regulatory bodies (like ICAI) mandate registration of the firm with them separately
  

Regulatory Oversight and Compliance
Professional partnerships are subject to dual compliance—general business laws and specific professional regulations.

• Registration may be required with both the Registrar of Firms and the professional body
  
• Compliance with ethical codes, confidentiality, and client care is mandatory
  
• Continuing professional education (CPE) may be needed for partners
  
• Regular audits, inspections, or peer reviews may apply depending on the profession
  
• Licensing authorities can suspend or restrict practice for misconduct or violations
  

Taxation and Financial Reporting
Professional firms are taxed similarly to regular partnership firms, but certain exemptions and audit rules may apply based on turnover.

• Income tax is filed under ITR Form 5
  
• Tax audit is mandatory if gross receipts exceed ₹50 lakhs
  
• No separate tax status unless it is an LLP
  
• GST registration is required if the turnover crosses the prescribed threshold
  
• Professional receipts are reported under “income from business or profession.”
  

Advantages and Considerations
Professional partnership firms offer a strong model for delivering expert services, but they require strict governance and legal discipline.

• Promotes shared responsibility and pooled expertise
  
• Offers flexibility in management and client servicing
  
• Legal liabilities are shared jointly and severally unless structured as an LLP
  
• Easier compliance compared to companies, but stricter ethical control
  
• Suited for firms offering advisory, consultancy, legal, and audit services