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What is Partnership Firm Registration?

For a while, let’s skip Partnership Firm Registration and firstly understand what Partnership Firm is. Partnership Firm is a kind of business structure which is pretty simple to form and can be started with a minimum of two people.

If we talk about the compliances pertaining to the partnership firm, they are quite less as compared to other corporate entities. In a partnership firm, two or more people come together to work for their mutual benefits. These people are known as partners.

Partnership Firm Registration isn’t mandatory for running a partnership firm. However, experts always advise applicants to obtain registration before they start the business. The registration will help them with several legal benefits which a partnership firm without registration cannot avail.

Benefits of Partnership Firm Registration in India

There are several reasons why Partnership Firm Registration could be beneficial for you. They are as described below:

  • Minimum two persons

    To form a partnership firm, a minimum of two persons are required. However, it completely depends on the applicant how many partners he/she is willing to work with. One can increase the number of partners. But two persons are sufficient to start a partnership firm in India.

  • Shared responsibilities and duties

    Every partner in the firm has certain specified duties. The duties and responsibilities of the partners are shared.

  • Easyformation

    Because of less documentation and minimum legal formalities, registration of partnership firm as well as its formation is pretty easy.

  • No annual returns

    Unlike other business entities such as Private Limited, Public Limited, and One Company Limited Companies where you have to file annual returns, in contrast, Partnership Firms don’t need to file annual returns.

  • Less compliances and regulations

    When compared to companies and LLP, the compliances and regulations in the case of a partnership firm are considerably lesser.

  • Better management

    It is easier to manage the operations of partnership firms as all the partners take interest in everyday business affairs because of profit, control, and ownership.

What could be the consequences if you don’t register the Partnership Firm?

Indian Partnership Act, 1932 gives several rights to the partners of the company. However, if you don’t register your partnership firm under Indian Partnership Act, then you and other partners can’t enforce any rights under the Act. Furthermore, in the case of disputes with the third party, the partnership firm can’t claim for setoff. However, the third party has the power to sue the firm.

Things to consider while choosing the name of the Partnership Firm

Before you go for partnership firm registration in India, you need to select a name. For the same, you are required to keep the following things into consideration:

  • The name of the firm should be unique and must not be a match of any existing firm involved in the similar or same business class.
  • There shouldn’t be any word like empire, crown, emperor, or any such words in the name of the firm which requires approval from the government.

Documents Required for Registration of Partnership Firm

So if you have decided to start your partnership firm and wish to obtain partnership firm registration, then keep the following documents ready:

  • Form 1 (Application for Registration under Partnership Act).
  • Original Copy of Partnership Agreement/ Deed signed by all partner and duly stamped.
  • Affidavit declaring intention to become a partner.
  • Rent agreement of property as may be applicable.
  • Documents of firm such as PAN card and address proof of the firm.
  • Documents of partners such as the PAN of the partners and address proof such as Driving License, Voter Id Card, etc.

How can Swarit Advisors help you with online registration of Partnership Firm?

For online registration of Partnership Firm with Swarit Advisors, follow the steps described below:

  • Step 1:

    Fill up the enquiry form given at the right side of the screen and request a call back.

  • Step 2:

    One of our experts will call you and understand your need of starting a partnership firm.

  • Step 3:

    You need to provide all the documents required for partnership firm registration in India.

  • Step 4:

    Our expert will create a Partnership Deed containing all the required information and send it to you.

  • Step 5:

    If you find it correct, then they will give the final copy to you. In the case, you need to add or remove something, let our expert know. He/she will amend it and send it back to you.

  • Step 6:

    After partnership deed, we will submit all your documents to the concerned body.

  • Step 7:

    Once everything is find true, your partnership firm will be registered and you will get the registration certificate.

What are the essential factors of the Partnership Deed?

While drafting a partnership deed, one must ensure the following factors are included in the deed:

General Information:

  • Name and address of all the partners;
  • Name and address of the firm;
  • Date on which the business capital is started to be contributed by each partner;
  • Details of capital that each partner will contribute;
  • Profit/loss sharing ratio amongst the partners.

Specific Information:

  • Interest on capital investment, any loans given by the partners to the firm or capital dawn by the partners;
  • Duties and obligations of every partner;
  • Right of every partner, consisting of additional rights that active partners can enjoy;
  • Commissions, salaries or any other amount to be paid to the partners;
  • Processes or any adjustments to be followed on death or retirement of a partner or dissolution of firm.
  • Other clauses as mutually decided by the partners.

What is the essence of a partnership deed?

It is considered most important document of the partnership, which comprises the terms and conditions relating to the partnership and the guidelines governing its internal management and organization.

The deed can be in oral or written form. It is usually a written agreement between the partners of the firm that is used to address the eventuality that the partner will need to be bought out. It tells you the nature of Business. Further, it includes in it, the Profit/Loss sharing ratio among the partners; Rights, Duties and obligations of all the partners; duration of the partnership; the rate of interest charged on share capital; Maximum Amount for drawing on each Partner and Interest charged open it etc.

Is a partnership firm a separate entity?

To define: "Partnership" is the relation between persons who have agreed to share the profits and losses of a business carried on by all or any of them acting for all. In such a partnership firm all the persons who have entered into are individually are called partners and collectively known as Firm. But a Partnership firm does not have a separate legal personality.

Number of Partners in the Partnership Firm

Minimum

2

Maximum

 

Case of Banking

10

In case of other Business

20

Note: The partners in the Partnership firm can divide profits and losses equally or unequally.

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