November 20, 2019
5 min read
This article discusses the meaning of partnership firm business, the process of partnership firm registration and partnership deed in India.
There are various kinds of business structures in India in which entrepreneurs can register their business. Registering as a company is considered as the most preferred form of business for Indian businesses, however, it may not always be possible for business owners to have the required resources in place for company registration or LLP registration. Furthermore, the number of members in business may not be large and the nature of the business may require close interaction and control over the business. This is when entrepreneurs have the option to opt for Partnership Firm registration in India. This article discusses the meaning of partnership firm business, the process of partnership firm registration and partnership deed in India.
A partnership firm is a kind of business structure wherein there are two or more than 2 people who start a business together by pooling their resources and share the profits and losses in an agreed ratio. Partnership firms in India are governed under the Indian Partnership Act, 1932.
Under the Act, partnership firm form of business is defined as the relation between the persons who have agreed to share the profits of the business carried on by all or any of them acting for all.
As per the laws, there can be a minimum of two partners in a partnership firm and there can be a maximum of 100 partners. The limit for the maximum number of partners was increased by the Companies Act, 2013 from a maximum of 20 partners.
A Partnership Deed is a legal document that lays down the relationship between the partners and the firm, and the terms and conditions relating to their rights, liabilities, and duties. A Partnership Deed is a written document that can be enforced under the law by registering the partnership firm.
Since the Partnership Deed charters the relationship between the partners, it acts as a guide in case of any disputes or discrepancies between the partners. A Partnership Deed contains the following information and it is suggested to business owners to consult good business consultants in India to understand the contents they should put in the Partnership Deed for their firm.
Details of the business such as the name, address, and nature of activities undertaken.
The amount of capital invested by each partner, the ratio in which the profits and losses will be shared, the salaries to be paid to each partner, mode of payment, and bonuses or debts to be paid off.
Details regarding the cash flow, assets and liabilities, profits and losses, etc.
Duties and responsibilities of each partner.
Powers and rights of partners.
Designation of each partner.
Property brought in by the partner in the form of land, machinery, IPR, etc.
Procedure to be followed in case a partner leaves or dies.
The procedure of dissolution of the partnership firm.
Method of dispute resolution between the partners.
Action in case of breach of partnership deed by any partner.
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As per the Indian Partnership Act, it is not mandatory to register a Partnership, but it is advised by the best business consultants in India to register a partnership firm to avail the benefits that come with the partnership firm registration. The process followed for partnership firm registration includes the following steps:
A partnership firm can be registered by filing an application for registration along with requisite fees and documents including the partnership deed. The application is filed with the Registrar of Firms of the area in which the business is located.
The application for partnership firm registration in India includes details like:
Firm name and nature of business of the firm
Place or principal place of business
Names of other places where the business is undertaken
Date of joining of each partner
Full names and addresses of the partners
Duration of the firm
The registration application must be signed by all the partners or agents who are authorised to do so and sent to the Registrar within a period of one year from the date of formation of the partnership firm.
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The documents required to register a partnership firm include:
Duly filled affidavit
A certified and true copy of Partnership Deed.
Proof of ownership of the place of business or rent agreement.
ID proof of partners.
Once the Registrar is satisfied with the documents and registration application, the Registrar makes an entry of Statement in a register called the Register of Firms and files the Statement. The date on which the Registrar records and files the Statement is considered as the date of registration of the Partnership firm.
Consulting a good CA professional is essential to fulfilling all the requirements for partnership firm registration in India. SeekWiser has a wide network of top business experts who can assist businesses with their business structuring and incorporation.
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