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PARTNERSHIP FIRM REGISTRATION

Partnership is a common form of business wherein two or more persons associate to carry on, manage a business and share the profits and losses. Liability of the partners in a partnership firm is joint and several. The Partners are personally liable for the debts of the partnership firm. The profits of the business are divided between the partners in accordance with their share in the firm. There can be a minimum of 2 and maximum of 20 partners in a partnership firm.

A partnership firm is not a separate legal entity distinct from its members. It is merely a collective name given to the individuals composing it. Hence, unlike a company which has a separate legal entity distinct from its members, a firm cannot possess property or employ servants, neither it can be a debtor or a creditor. It cannot sue or be sued by others. Generally small and medium sized businesses with low capital investment opt for partnership registration as this type of business constitution involves less legal complications, low costs and very few legal compliances. Registration of partnership is optional but is always advisable to opt for partnership registration as it gives legal recognition and safety to the business.

CHARACTERISTICS OF PARTNERSHIP FIRM

Existence of an agreement :
Partnership is the outcome of an agreement between two or more persons to carry on business. This agreement may be oral or in writing, the relation of partnership arises from contract and not from status.

Existence of Business :
Partnership is formed to carry on a business which is lawful.

Sharing of profits :
The purpose of partnership should be to earn profits and to share it. In the absence of any agreement, the partner should share profits (and losses as well) in equal proportions.

Agency Relationship :
While each partner is a principal to the outside public to the other partners he is an agent. However a partner must function within the limits of authority conferred on him.

partner
Membership :
The minimum number of persons reuired to constitute a partnership is two, however the upper limit is not mentioned in the Act. But the Companies Act states that the maximum number of persons is ten in case of a banking business and twenty in case of other business.

Nature of Liability :
The nature of liability of partners is the same as in case of sole proprietorship. The liability of partners is both individual and collective. The creditors have a right to recover the firm’s debts from the private property of one or all the partners.

Fusion of Ownership and Control :
The identity of partners is not different from the identity of partnership firm. As such, the right of management and control vests with the owners.

Non-transferability of Interest :
No partner can assign or transfer his partnership share to any other person so as to make him a partner in the business without the consent of all other partners.

Registration of Firm :
Registration of a partnership firm is not compulsory under of Indian Partnership Act, 1932, though it is usually done as registration brings many advantages to the firm. It is optional for partners to set the firm registered and there are no penalties for non-registration.

ADVANTAGES OF PARTNERSHIP FIRM

Easy Formation :
A Partnership is easy to form as no cumbersome legal formalities are involved. Registration of partnership is not essential. However, if the firm is registered, it will have certain legal benefits. The Registrar of Firms is responsible for registering partnership firms.

Name Selection :
Name of a Partnership Firm is not registered. Partners are free to select any name of their choice for the firm. However, partners should be always be very careful make sure that the chosen name does not infringe any trademark or copyright of third person. It is also advised to get trademark of the name chosen for a Partnership Firm, otherwise some other person may also use the same name for his company.

Larger Resources :
Due to more number of members the partnership firm has larger resources for the business operations as compared to sole proprietorship.

Risk Sharing :
In partnership every partner bears the risks individually as it is easier compared to sole proprietorship.

company
Flexibility in Operations :
Due to the limited number of partners there is flexibility in the operations of business as the partners can amend any objectives or change any operations any time by mutual consent.

No Annual Returns :
Unlike a Company or Limited Liability Partnership, a Partnership firm need not file its annual accounts with the Registrar.

No Statutory Auditor :
A Partnership Firm is not required to file Audited financial statements with the Registrar of Firms. Therefore a Partnership Firm is not required to get its books of accounts audited. However, it might be necessary as per the provisions of Income Tax Act, to do Tax Audit if turnover exceeds prescribed limits.

Winding up :
It is easy to windup a Partnership Firm compared to a Company. It can be done by simply entering into a dissolution deed.

DISADVANTAGES OF PARTNERSHIP FIRM

Instability :
A partnership firm does not exist for an indefinite period of time. The death, insolvency or lunacy of a partner may lead to dissolution of the partnership firm.

Unlimited Liability :
Liability of every partner in a partnership firm is unlimited as any of the partners may be called upon to pay all the debts even from its personal properties. A single wrong decision by one partner can lead other partners in heavy losses and liabilities.

Lack of Harmony :
According partnership agreement every partner has equal rights. Some situations might occur in which one or the other partner will not agree on the same thing which will cause difference of opinion resulting mistrust and disharmony among the partners.

Limited Capital :
Due to the restriction on the maximum number of members, a limited amount of capital can be raised.

No legal Status :
A partnership firm does not have a legal status like a Joint Stock Company.

DOCUMENTS REQUIRED FOR REGISTRATION OF PARTNERSHIP FIRM

  • Application for registration under Partnership Act (Form No.1)
  • Partnership Deed signed by all the partners.
  • Affidavit of intending partner.
  • Lease Agreement.

  • ID proof of partners
  • Address proof of partners
  • Photograph of partners
  • NOC from owner if premises of firm is rented


FIXED PRICE PLANS

BASIC PLAN

INR 4,999/-

  • Partnership deed drafting by Advocate
  • Affidavit
  • Preparation of Application
  • Government Fee and Taxes

CHECK OUT

GOLD PLAN

INR 5,999/-

  • Partnership deed drafting by Advocate
  • Affidavit
  • Preparation of application and Registration
  • Government Fee and Taxes


CHECK OUT

PLATINUM PLAN

INR 13,999/-

  • Partnership deed drafting by Advocate
  • Affidavit
  • Preparation of Application and Registration
  • Trademark Registration
  • Government Fee and Taxes
CHECK OUT
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