This article will explain in details about Partnership Business in Bangladesh and how can you start your business in Bangladesh.
There are six ways of doing business in Bangladesh:
In general, these five types of business entities can be found in Bangladesh. Around 65 percent of businesses are run on a sole proprietorship basis.
A partnership is a type of business structure where two or more partners start an entity to do business. For a partnership to exist, there must always be two or more partners.
A Partnership is defined by the Partnership Act, 1932 , (the “Partnership Act”) as ‘the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all’. This definition gives three minimum requirements to constitute a partnership:
The individuals who wish to form a partnership must enter into a verbal or written agreement.
The purpose of the agreement must be to divide the profits from the business that will be conducted by the partnership, and
The business must be operated by all of the partners or by one of them acting on their behalf.
The Partnership Act does not define the term “person.”
There are no penalties for failing to register your partnership, so registration is not required. However, it is recommended as the following rights are denied to unregistered businesses:
The Partnership Act prohibits a partner from bringing a lawsuit against the firm or other partners to enforce any contractual or statutory right.
A contractual right cannot be enforced in court by or on behalf of your company against a third party.
In addition, neither the firm nor any of its partners may assert a set-off (i.e., the mutual adjustment of debts owed by disputing parties to one another) or other proceedings in a dispute with a third party.
In Bangladesh, a registered partnership is the only way to establish a separate legal identity (i.e. separate from its owners) for liability purposes.
All partners of a partnership are jointly and severally liable for the partnership’s liability.
In Bangladesh, the concept of Limited Liability Partnership does not exist.
Tax-wise, partnership business in Bangladesh are not taxed at the entity level; rather, profits are treated as part of each partner’s personal income and taxed at rates applicable to personal income.
There must be at least two and no more than twenty partners in partnership business in Bangladesh.
The partners can be individuals or corporations.
In Bangladesh, unlike private or public limited companies, partnerships do not have directors, shareholders, or secretaries; instead, the partners own and operate the business.
For a partnership to be registered in Bangladesh, the following information/documents are required:
The Registrar of Joint Stock Companies and Firms of Bangladesh (“RJSC”) can register a partnership.
The registration process for a partnership business in Bangladesh consists of two steps: name reservation and entity registration. Typically, registration of a partnership can be completed within one or two days.
The partners may choose any name for their partnership business in Bangladesh , subject to the following restrictions:
The names must not be too similar to or identical with the name of an existing business engaged in a similar line of work. The reason for this rule is that a company’s reputation or goodwill may be damaged if a new company adopts an allied name.
The name cannot contain certain words that express or imply the sanction, approval, or sponsorship of the government.
After selecting a name, you must submit an application for name clearance via the RJSC website.
You must create a partnership agreement for your partnership business in Bangladesh. Typically, a partnership agreement will include the following clauses:
The Partnership Deed must be printed on stamp paper in accordance with the Stamp Act, and all partners must sign it. It should then be notarized.
The partnership deed and its completion Form I must be submitted to RJSC. These documents will be reviewed by RJSC representatives. When officials are satisfied with the points stated in the partnership agreement, he shall record an entry of the statement in the Register of Firms and issue a Certificate of Registration.
There are numerous types of businesses in Bangladesh. One is a Partnership Firm, while the others are Sole Proprietorship and Limited Liability Company. The Partnership Act of 1932 governs the formation of a Partnership Firm. In Bangladesh, only RJSC (The Registrar of Joint Stock Companies and Firms) has the authority to register Partnership Firms. For Partnership Registration in Bangladesh, the steps outlined at the end of this article must be followed.
A sole proprietorship is not a separate legal entity. The owner is responsible for all business outcomes.
The proprietor will be required to pay the tax on his personal income from the business.
After obtaining a Trade License for a sole proprietorship, a Taxpayer Identification Number (TIN) certificate is required to create a bank account (business account) in order to conduct commercial transactions.
Currently, most businesses incorporate VAT (Value Added Tax). To deduct VAT, a VAT Registration Certificate must be collected. To operate a business and deduct AIT (Advance Income Tax) at the source, a TIN is required.
If a proprietor desires to engage in international or multinational company, he or she must possess an Export Registration Certificate or an Import Registration Certificate. Bangladesh is now one of the world’s largest exporters of ready-made clothes, jute, frozen foods, leather goods, and potatoes.
In Bangladesh, a significant number of proprietorships, partnerships, and limited liability companies are interested in engaging in international commerce or export and import operations. In Bangladesh, when two or more entrepreneurs wish to start a firm, they must either form a Limited Company or a Partnership Firm.
When two or more people with a similar mindset or similar professional backgrounds start a business and create a voluntary agreement with the intention of making and sharing profits, this is referred to as a Partnership Business. Minimum of two and maximum of twenty individuals can form a business partnership.
In order to open a bank account for a partnership business, registration with the RJSC is now required. For this reason, many unregistered Partnership Business proprietors will register their Partnership Business with RJSC. To obtain legal privileges, however, Partnership Business Registration with RJSC is required.
The partnership agreement is commonly referred to as the partnership deed. Typically, the following provisions are included in a Partnership Deed:
A partnership can be registered either at the time of formation or later. An application must be submitted to the RJSC with the following information:
We recommend that you immediately register your existing Partnership Firm to avoid unforeseen circumstances. Also, if you establish a new partnership in Bangladesh, you must register with the RJSC. Please review the specifics of additional RJSC.
Due to the nature of business start-up capital funds provided by the partners, the greater the number of partners, the more capital they can invest in their business, allowing for greater adaptability and advancement potential.
Generally speaking, a partnership is simpler to register, operate, and manage. Partnerships are subject to less stringent rules and regulations than corporations. As long as all partners are in agreement, they are free to run their business as they see fit.
Every business partner contributes new ideas and abilities. It is easier to make a decision to solve a problem when there are more minds to consider it. Each partner can share in the business’s duties and responsibilities.
After completing Partnership Registration in Bangladesh, the following documents are required to commence business operations:
Certificate of Trade License for your newly registered Partnership.
Certificate of VAT Registration for a Bank Account
Import Registration Certificate (In case of Import Business)
Certificate of Registration for Export (In case of Export Business)
