Partnership, during a layman language, refers to the approaching together of two or more people to hold out a particular task. within the corporate structure of India, the Indian Partnership Act (1932) (referred to as Act hereafter), defines partnership as “the relation between two or more persons who have agreed to share the profits of a business carried on by all or any of them acting for all.” during a proprietary business a private has constraints on the power, skill, and capital to run the business, besides liability which will occur anytime.
Any firm which falls under the category of little or medium scale business can prevail under the partnership, as there is limited legal compliance. it’s not mandatory to register as a partnership firm under the Act, but registering a firm gives the partnership a legal identity and has several advantages just in case of disputes among the partners, settling a claim against a third party.
A partnership is governed by a partnership deed, which must be a document duly signed by all the partners. The deed fulfills the need of dissipating information about the firm – name, partners’ details, nature of the business, the situation of the business et al. . Without much hassle to accumulate a minimum capital, two or more people can start a partnership firm, as there’s no minimum capital requirement under the Act.
How to Register as a Partnership Firm?
The increasing use of technology has also allowed the govt entities to form functions like registration and compliance online. In India, although a variety of states still follow an offline procedure, there are few states who have adopted the web registration process which needs the appliance to be filed with the Register of Firms (ROF).
Follow these simple steps to register for a Partnership Firm under the Act.
- Choose a name for a partnership
A firm should select a reputation that doesn’t resemble the name or color-able imitation of the entity that’s already public. Partnership name shouldn’t be similar or just like an existing company doing an equivalent business.
- Draft a Partnership Deed
The partnership deed is that the most vital document for the registration of the corporate because it provides the registrar with the subsequent necessary information:
- Name and address of the company and everyone partners
- Contact details of partners
- Nature of the business
- Duration of the partnership
- Profit/Loss sharing ratio
- Rules regarding the solvency of the firm
- Information of capital to be contributed by each partner
Additionally, the Deed also contains information about the remuneration payable to partners in more than the profit shares, responsibilities of partners, audit procedures, etc.
- Apply for a PAN Card within the Partnership Name
A firm, regardless of registration under the Act, has got to apply for a Permanent Account Number to the tax Department. this will be applied to the idea of accounting within the name of the firm. The PAN may be a requirement to satisfy the requirement of paying taxes.
- File a registration application
The registration application requires a firm to supply information regarding the name of the firm, the character of the business administered, address of the business, names, and addresses of all the partners, date of commencement of business. this type is further taken to the registrar within the region of the firm’s headquarters.
- Submit the required documents
Along with the registration application, the subsequent documents are to be submitted to the Registrar as a neighborhood of the registration process:
- Application for registration of partnership (Form 1)
- A certified original copy of the partnership deed
- Specimen of Affidavit
- PAN Card within the name of partnership firm
- Proof of address of the partnership firm, ownership deed, lease and rent agreements, etc. are common acceptable documents
- PAN Cards and address proofs of all the partners
- Pay the fees and stamp duties
A registration fee and a stamp tax got to be paid at the time of the submission of the documents with the Registrar. The fees vary across states. One must understand that the registration isn’t complete until all dues are paid.
- Finalize the Deed
To legalize the Deed, it should be provided to every partner in a written form on stamp paper. One stamp paper deed should be duly signed by all the partners ahead of the notary. the worth of the stamp varies from state to state. The signed copy is thereafter submitted to the Registrar during the registration process.
- Certification from the Registrar
The registrar, after a thorough examination of the documents, will issue a registration certificate.
The firm is going to be thus on record within the Register of Firms. On the date of this entry, the firm shall be deemed to be registered. The partnership firm is required to feature ‘(Registered)’ after its name from the date of registration.
A lot of states in India now provide the power of registering partnership firms online. the web registration of a partnership firm requires the firm to file an application online. The firm will need to furnish equivalent information on this type. The acknowledgment number raised after the submission of the appliance is further won’t log in on the website and therefore the firm has got to upload the scanned copies of all the above-mentioned documents. The registrar will review the documents and therefore the certificate is going to be sent through an email.
- Key Features of a Partnership Firm
A partnership firm has elements that make it suitable for little and medium-scale businesses.
Some of the key features of a Partnership Firm are:
- A partnership firm can have a minimum of two and a maximum of a hundred members, consistent with the Business Act, 2013.
- A registered firm is additionally required to use ‘(Registered)’ after the firm name
- Increased manpower often results in the integration of specialized skills and skills that would help during a rapid climb
- A partnership firm unlike a corporation has no separate legal entity, except if the sort of partnership may be an indebtedness Partnership
- Each partner during a partnership firm has a vast liability, but an indebtedness Partnership (LLP) removes this shackle and limits the obligations of a partner
- There is not any minimum capital requirement for commencing a partnership firm
- A partner is restricted to transfer his/her profits or rights entailing from the partnership without the consent of all partners
- In either case, a partnership firm is registered or unregistered under the Act, third parties can sue the firm to enforce their claim
- Benefits of a Partnership Registration
A partnership firm compared to a proprietary business has an upside of inculcating more skills, capital, and risk-sharing; and compared to a corporation it’s an upside of easy processes and minimal compliance that creates partnership a viable option for little and medium scale enterprises. a number of its key benefits include:
- The partners during a partnership firm get the enjoy risk sharing, unlike a private during a proprietary firm whose liability is often unlimited
- The most vital benefit that arises from the registration is that when there are disputes between or among the partners, a partner can sue the opposite partners
- Registration also enables the Partnership firm to sue third parties to enforce its claim
- The dissolution procedure for a registered Partnership firm is reliable and quick
In legal disputes, the primary thing the court establishes is whether or not the incorporation is registered. Therefore, it’s advisable to urge the partnership registered under the Act.
Visited 3 Times, 1 Visit today