Partnership Registration In India
What is Partnership?
According to Sec 4 of the Partnership Act 1932, “Partnership is the relation between 2 or more persons who have agreed to share profits or losses of a business carried on by all or any of them acting for all”.
Persons who have entered into a partnership with one another are called individually ‘Partner’ and collectively a ‘firm’
A Partnership Firm is a business entity that is controlled by an association of people. The sole purpose of forming a partnership firm is to make profits. In a partnership firm, the partners share the liability of profit and loss of the company. Indian Partnership Act 1932 is the law that governs the partnership firm in India.
A partnership deed is an agreement between the partners in a partnership firm which states the rights, duties, profits, shares and other obligations of each partner.
Partnership deed can be written or communicated orally. However, a written partnership deed registration is always better to avoid conflicts.
The following are the essential characteristics of the partnership deed registration:
- The agreed name of the Partnership firm.
- Nature of business
- Date of commencement of business
- Principal place of business
- Contribution of capital from Partners
- Name and details of partners
- Rights and duties of each partner
- Salaries, commissions or any other amount to be payable to partners
- The process to be followed in case of bringing any new partner or retirement of partner or death of partner or dissolution of the partner.
- Any other clauses as partners may decide on their mutual understanding and discussion.
MINIMUM CRITERIA OF FORMATION OF PARTNERSHIP FIRM
- Minimum number of partners required are two
- No minimum capital required
- Maximum number of partners is 10 in case of Banking business
- For other businesses, the maximum number of partners required is 20.
- Minor cannot be a partner
- Only Indian citizens can become partners.
TYPES OF PARTNERSHIP REGISTRATION
There are two types of Partnership firms, one is a Registered Partnership and Unregistered Partnership. The only criteria to start and execute the partnership business is via Partnership deed, it does not require to be registered. There are many Partnership businesses that exist as an unregistered firm.
Registered Partnership – Partners need to execute the agreement known as Partnership deed and stamp duty needs to be paid based on the state act, such deed executed and an application along with the prescribed fees is submitted to the Registrar of Firms of the state.
Unregistered Partnership – Partners execute the deed and start the business without submitting or registering it in the Registrar of firms.The consequences of not registering the firm are as follows:
- The firm cannot file the legal proceedings against any third party in any situation with respect to any dues to be paid to the firm.
- Unless the firm is not registered the partner cannot sue for any legal action on the existing partners or on the third party from the agreement.
NEW PARTNERSHIP FIRM REGISTRATION PROCESS
The process of formation of partnership firms must be in adherence with the terms and the conditions laid down by the Government.
- Selection of name of the Partnership Firm
- Drafting of Partnership Deed
- Payment of Stamp duty of Partnership Deed
- Signing of partners
- Submitting to ROF (Registrar of Firms)
- Application for PAN
- Application for TAN
Partnership Registration With Chhota CFO
Partnership registration is one of the most well-known forms of the business constitution. These forms of business concerns are popular among small and medium based business organizations that have limited capital. They are relatively easy to form since they require only minimum formalities.
Be it company registration, compliances, or annual financial services Chhota CFO renders all the services catering to your business needs. Headquartered in Bangalore, we have PAN India presence offering services to various clients in India and abroad.
You can also benefit from Partnership Registration Online.
ESSENTIAL ELEMENTS OF PARTNERSHIP
- A plurality of members –More than one person involved with the formation of the partnership business.
- Contractual relation –The relationship of partners depends on the contract among them on the basis of Agreement.
- Legal Business – The business must be legal in the eye of law. Two or more persons involved with the illegal business is not a partnership.
- Lawful Business –The partnership business which must be legal in the eye of law.
- Earning and sharing profit –The profit which is earned from the partnership business must be shared among the partners according to the predetermined ratio.
- Unlimited Liability of the Partners – Each Partner is personally liable for all the losses arising in the business.
- No FDI (Foreign Direct Investment) is allowed –Foreign Direct Investment is not permitted in a partnership business.
- Duration of a Partnership firm –The partnership firm may continue as long as the partners wish to do so.
BENEFITS OF GETTING A PARTNERSHIP REGISTRATION
- Easy to start
- Less expensive
- Recognition and control of law
- Contractual Relation among partners
- Decision making
- Easy to raise funds
- Sharing of Profit & loss
- Greater borrowing capacity
- Easily changeable legal structure
- Very minimal legal Compliances
- Unlimited Liabilities
- Collective Decision
- Sharing of Risk among partners
- Effective management
- Joint efforts
- Equal rights to partners
- Easy to dissolve
Dedicated Professionals To Handle Your Partnership Registration
Chhota CFO has a well-defined team of experts who are known to help in any registration process. Partnership registrations are usually considered stress. But, when you choose Chhota CFO, you’ll surely find ease in the process.
If you’re a business owner looking for a partnership firm registration, Chhota CFO is your go-to source.
Our team at Chhota CFO will assist you in understanding the process of registering your Partnership firm and guide you through the process in the most professional way.
A trustworthy professional team, affordable pricing and on-time execution are the reasons why Chhota CFO stands out from the rest.
A partnership firm can operate for any definite or indefinite duration
Trust our dedicated professionals to get your Partnership Registration done on time. Get in touch with us today and get a FREE consultation!
Count on us to handle all your Accounting and Taxation services as well.
Call us at +91 973 973 6999 | +91 991 666 8146 register a company online!