About Partnership Firm
A Partnership firm is a business entity created by persons who have agreed to share profits or loss of the business. Partnerships are a very good choice of business entity for small enterprises wherein two or more persons decides to contribute to a business and share the profits or losses. In India, Partnerships are widely prevalent because of its ease of formation and minimal regulatory compliance.There are two types of Partnership, registered Partnership and unregistered Partnership. In terms of the Indian Partnership Act, 1932, (Act), the only criterion to commence business as a partnership is the finalisation and execution of a Partnership Deed between the Partners. The Act does not require the Partnership Deed/Partnership Firm to be registered and in other words, does not require the Partnership Firm to be a registered Firm. Therefore various partnership businesses exist as an unregistered firm.
One of the main advantages of a Partnership Firm is that there are very minimal requirements in terms of compliance.
Availability of Resources
Since two or more partners join hands to start a partnership business, it may be possible to pool together more resources as compared to a sole proprietorship. The partners can contribute more capital, more effort and more time for the business.
The partners are the owners of the business. Each of them has equal right to participate in the management of the business. In case of any conflict, they can sit together to solve the problem. Since all partners participate in the decision-making pro
The partners are the owners of the business. Each of them has equal right to participate in the management of the business. In case of any conflict, they can sit together to solve the problem. Since a
In a partnership firm, every partner has an equal right in decision making and the management of the business. If any decision goes against the interest of any partner, he can prevent the decision from being taken.
Content of Partnership Deed
Following details are required in a partnership deed:
A. General Details:
- Name and address of the firm and all the partners
- Nature of business
- Date of starting of business Capital to be contributed by each partner
- Capital to be contributed by each partner
- Profit/loss sharing ratio among the partners
B. Specific Details:
Apart from these, certain specific clauses may also be mentioned to avoid any conflict at a later stage:
- Interest on capital invested, drawings by partners or any loans provided by partners to firm
- Salaries, commissions or any other amount to be payable to partners
- Rights of each partner, including additional rights to be enjoyed by the active partners
- Duties and obligations of all partners
- Adjustments or processes to be followed on account of retirement or death of a partner or dissolution of firm.
- Other clauses as partners may decide by mutual discussion
Documents Required for Registration
Documents required for partnership Firm registration
Following are the documents required for partnership firm registration in India:
- Application for partnership firm registration in the prescribed Form – I.
- Duly filled Specimen of Affidavit.
- Certified copy of the Partnership deed on appropriate non-judicial stamp paper.
- Proof of ownership of the place of business or the rental/lease agreement thereof.
- Affix court fee stamp & payment of prescribed fee for registration by demand draft.
Step-1 : Choose an Appropriate Name for the Partnership Firm
This is the first step in registering the Partnership Firm. Additionally, the name so suggested should not come under the restricted list of names as per the provisions of the Emblems and Names Act, 1950.
Step-2 : Formulate Partnership Deed your Firm
Partnership Deed is legal evidence of your Firm existence and it contains the objectives and rules & regulations of your Firm .
Step-3 : Submit the files to registrar of Firm & Society and signature over the documents
The file has to submit along with the documents like Form-1, Affidavit, NOC and Partnership Deed at the registrar of Firm & society for getting approval of registration.
Obtain the Registration Certificate and Registered Deed
After submitting all the Documents with the registrar of Firm & Societies, the registrar retains one copy and returns the original registered copy of the Deed with certificate of Registration.
PAN, TAN And Bank Account
The final step in the process of registration is to apply for allocation of PAN number and TAN and afterwards apply for a bank account.