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Partnership Firm
Partnership Firm Registration in India
Partnership firm is one of the most popular forms of entity incorporation where two or more people form a business together and share the profits and losses. The registration of partnership is not mandatory but it is highly risky and not recommended by the department and professional experts. Partnership registration is relatively easy and is prevalent among small and medium sized businesses in the unorganized sectors. Partnership Registration is done through
For Partnership Registration, you must agree on a firm name and then establish a partnership deed. It is a document stating respective rights and obligations of the partners and to be valid it should be written The terms of the Partnership Deed can be varied to suit the interests of the partners and can even be made contrary to the Indian Partnership Act, 1932 but if the Partnership Deed is silent on any point, then the provisions of the Act would apply.
- Ideally, it is mandatory to validate the details in a partnership agreement that specifies each partner’s rights, responsibilities, and share of the profits.
- Partnership firms are registered with the Registrar of Firms
What is a Partnership firm?
Partnership firm is a business entity registered under the Partnership Act, 1932 where two or more people join together as partners for running & managing a business while sharing the profits and losses in an agreed ratio. Partnership firms can only be registered when the partnership deed is signed and accepted by all the partners of the firm.
Types of Partnership Firm
Based on Creation
A partnership can be formed by the creation or for a specific purpose. Partnerships based on creation are further subdivided into:
Partnership Made by Will
Here, there is no formal agreement or contract between the partners related to the partnership. The mutual consent of the parties just forms this partnership. There is no specific period for the partnership. Section 7 of the Indian Partnership Act deals with partnership made by a will.
Particular or Specific Partnership
Here, there may be a specific agreement or contract between the partners. However, this partnership is only for a specific purpose or a project. A typical example would be a joint venture (JV) agreement between two or more parties. The parties enter into a JV to earn out specific profits. Hence under the partnership firm registration process, some form of partnerships can be established through creation.
Based on Registration
Different types of partnerships can be formed through the registration process. Partnership Firm Registration process allows the applicant to form the following types of partnership based on registration:
Unregistered Partnership
Unregistered partnership is understood as a partnership which does not have any legal documentation pertaining to the process of partnership firm registration. Though there is mutual consent between the partners to act for the partnership, still having an agreement would reduce the issues for an unregistered partnership.
Registered Partnership
This form of partnership firm registration is carried out under the provisions of the Indian Partnership Act, 1932. Usually, individuals planning to form a partnership firm would utilise this form of partnership.
What is a Partnership deed?
Partnership deed is an agreement between the partners in which all the terms and conditions related to business are incorporated. Some of the major terms and conditions mentioned in the deed of a partnership are:
- Details of the firm and partners
- Profit and Loss sharing ratio among the partners
- Nature, commencement and duration of partnership firm
- Salary and commision of partners
- Interest on capital and loan
- Provisions related to capital introduction and capital withdrawal
- Accounting and Auditing
- Banking and Voting rights
- Conditions for admission, resignation and retirement of partners
- Salaries and any other information related to remuneration
Benefits of Partnership firm
- An Agreement
- Two or More Individuals
- Sharing Profits
- Ease of Conducting Business
- Less Compliance
- Deed of Partnership
- Simple to Raise Funds
Process of Partnership Firm Registration
- Name Reservation
- Application for Partnership Firm Registration
- Registration under Income Tax and Issuance of PAN
- GST registration
- Drafting the Partnership Deed
- Submitting Documents
- Verification
- Opening a Bank Account for the Partnership
Documents required for Partnership firm registration
- Copy of Aadhar and PAN Card of partners
- Partnership Agreement/Deed
- Address proof of office
Documents you’ll get after partnership registration
- PAN Card of firm
- Partnership Deed
- GST registration certificate (if required)
- Shop and Establishment Act License (if required)
OUR BLOGS
- What are the documents required for Partnership Deed
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As per the Partnership Act, 1932, it is required to submit a copy of PAN card of all partners and address proof of office for partnership registration.
- Is Notary complulsary on Partnership Deed
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Basically there are two types of partnership deeds – one is registered and the other one is not registered. Registered partnership is incorporated from the office of registrar where no notarisation is required. In case of unregistered partnership, notary is mandatory.
- Can Certificate of registration can be cancelled
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Yes, your registration can be cancelled. You’ll have to dissolute the firm for cancellation of partnership registration.
- How much times it takes to Registered Partnership Firm
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It takes around 4-7 working days to register a partnership.
