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What is a Partnership Firm?
“Partnership” is the relation between two or more persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Two or more parties come together with a formal agreement (known as Partnership Deed) where the roles, duties and the share of each partner is explicitly defined.Persons who have agreed to enter into partnership are called “PARTNERS” and collectivelya “FIRM”The risk and responsibilities are shared amongst the Partners.
Partnerships in India is governed by the Indian Partnership Act, 1932. Partnership Act, 1932 defines the structure of a Partnership Firm by providing all the necessary provisions to run the same. The Act validates both registered and unregistered partnership firms in India.
Benefits of forming a PartnershipFirm
Forming a Partnership Firm offers many benefits.
- Easy to Start
- Minimal Regulatory Compliance
- Operating Flexibility for Partners
- Various Financial Returns for the Partners
Requirements forForming a PartnershipFirm
To form a PartnershipFirm will require the following.
- Minimum 2 Partners
- No Capital Requirement
Detailed Registration Process
- Step 1: Submit all the required documents
- Step 2: Drafting a Partnership Deed
- Step 3: Payment of Stamp Duty on Deed
- Step 4: Notarisation of Partnership Deed
- Step 5: Apply for PAN and TAN of the Firm
- Step 6: Certificate of Registration from RoF
- Step 7: Open a Current Bank account on the Firm’s name
Documents required for registering a Partnership Firm
Listed below are the documents that are required for registering a Partnership Firm
Identity & Address Proof of Partners:
- Copy of Pan Card of Partners (mandatory)
- Aadhaar Card or Voter Id card or Driving License or Passport
- Any one of: Bank Statementor Electricity Bill or Mobile Bill (not older than 2 months)
- Passport Size Photograph of Partners
Proof of Registered Office (any one):
- Conveyance/ Lease deed/Rent Agreement etc. along with rent receipts (any one)
- Copy of the utility bills (Telephone/Gas/Electricity bill) (not older than two months) (any one)
Documents Required for Partnership Registration
- Form No. 1 (Application for registration under Partnership Act)
- Original copy of Partnership Deed, signed by all Partners
- Affidavit declaring intention to become Partner
- Rental or lease agreement of the property/campus on which the business is estabilished
Frequently Asked Question
When should we apply for registering our Partnership firm?
A partnership firm can be registered whether at the time of its formation or even subsequently. The application for registration is to be made to the registrar of firms of the region in which the business is located. It is advisable to get the firm registered as soon as it starts its business to avail the rights and benefits that can be enjoyed only by a registered firm.
Whether Partnership Deed registration is compulsory?
As per the Partnership Act, both registered and unregistered partnerships are valid and recognised by law. Partnership registration is not compulsory. Mostly, the businesses at initial level prefer unregistered partnership till they reach stable level. The unregistered partnership can be registered at any time after its formation.
What happens if I do not register my Partnership Firm?
If the Partnership is not registered, the firm cannot file suit against any partner or the third party. A partner also cannot sue the partnership firm for his claim.
What are the advantages of registering a Partnership Firm?
Only a registered partnership firm can claim a set off (ie. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party. Also, only a registered partnership firm can file a suit in any court against the firm or other Partners for the enforcement of any right arising from a contract or rights conferred by the Partnership Act. It is therefore advisable for Partnership Firms to get it registered.An unregistered Partnership Firm can get registered at any point of time after its establishment.
What is the minimum capital requirement to start a Partnership Firm?
Formation of Partnership Firm does not require any minimum amount. It can be started with any amount of capital contribution by the partners. The Partners can contribute any amount agreed amongst themselves and in any tangible form (cash, land, office space etc.) or intangible (goodwill, intellectual property). The Partners can introduce capital in any ratio, equal or uneven.
What are the Compliance requirements to be fulfilled by a Partnership firm?
A Partnership Firm is required to maintain the Books of Accounts and Financial Statement. The Income Tax Return should be filed for the respective financial year before the due date as per the Income Tax Act.
What our users have to say
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Kishore Kamble, Pune
I had purchased a flat in Bangalore. The builder had delayed possession from the committed date. I was paying a high EMI and rent which increased my monthly cash outflow and this left me with no money at the end of the month. I was very stressed and didn’t know what to do. I came across LegalKart and their Property Expert Lawyer advised me to send a legal notice to the Builder and also appeal to the RERA for the delayed possession. I got compensation from the builder for the delay and finally also got possession of my flat.
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