Partnership Firm Registration
A Partnership Firm
A partnership firm is essentially a legal entity formed when two or more individuals come together and start a company based on a partnership deed. In such a business structure, all the partners share the profits or losses incurred by the business as per a preset ratio. The registration of partnership firms come under the purview of Section 4 of the Indian Partnership Act. However, this Act also makes it clear that the registration of partnership firms is not mandatory in India. To function as a partnership firm, the partners need to register a Partnership Deed but have the option to leave their company unregistered, though that is not advised. The registration of partnership firms may be done by approaching the Registrar of Firms.
Importance of the Partnership Deed
The partnership deed is the soul of the partnership firm as it lays down all the procedures and rules related to the operation of the firm. Furthermore, partners must register the deed to ensure they enjoy a separate legal status. The partnership deed holds information pertaining to the rights, duties, responsibilities and profit-sharing ratio of partners, while also addressing the nature and type of business undertaken. Furthermore, the deed also helps in preventing disputes and misunderstandings later on, as it clearly defines the role of individual partners. Here’s a quick look at the details that every partnership deed must contain;
- Name and registered office address of the partnership firm
- Details regarding all the partners in the firm
- Duration of Partnership
- Nature and type of business conducted
- Capital contribution of each partner
- Profit-sharing ratio
- Date of commencement
- Salary and commission of each partner
- Roles and responsibilities of each partner
- Interest on the capital of each partner’s contribution
- Allocation of duties
- Procedure to add, remove partners
The process to follow in case a former partner retires or passes away
Registration of Partnership Firm:
Here is a quick look at the steps you need to take to register a Partnership Firm
- Choose a suitable name for the firm, ensuring that it complies with the laws stated above.
- Make sure you have all the required supporting documents.
- Draft a partnership deed on a stamp paper
- Duly fill the application form for registration of partnership firms
- Attach the attested, supporting documents as mentioned above to this application form.
- All the partners must then sign the application form and submit it to the RoF.
- On successful verification, the partners will receive a Certificate of Registration from the registrar within a week or so.
However, the partners should keep in mind that the registration of partnership firms with the RoF is different from registering for tax. To file IT returns in the right manner, the partnership firm must register with the IT department and obtain a PAN card. Once they receive the PAN, they must open a Current Account and make all business transactions through this account.
Steps For Registration
- To register for tax purposes, the partners must visit the website
- Moreover, from the main menu, click on the Registrar of Firms option.
- Provide all the details requested, such as PAN number, firm name, area, registered mobile number and email ID.
- Next, fill Form – A wand upload the application form along with the required supporting documents.
- Further, the dealers will also have to pay the registration fee that amounts to INR 30 to complete the procedure.
- Once successful registration, you will receive an acknowledgement number you can use for future reference.
- Advantages of Registering as a Partnership Firm in Gujarat
- Partnership firm registration is an easy process that does not include too many formalities and legal hassles.
- Founders get to start business proceedings as soon as the Partnership deed is registered.
- A Partnership Firm does not have to get its financial reports audited unless the turnover exceeds a certain amount.
- Partnership firms have very few compliance requirements, making them easy to operate and manage.
- Additionally, they are easy to wind up and shut down as all it takes is a dissolution deed.
- Since a partnership firm has more founders than a sole proprietorship, they have access to more resources.
- Since the partnership deed clearly defines the roles and responsibilities of each partner, such firms are easier to manage and run.
- Additionally, every partner bears liability helping share the risk and burden and protect personal assets along the way.
- moreover, it helps to make the firm more credible and trustworthy
- Allows partners to borrow money and own property in the partnership’s name
We, Relitrade Consultancy will help you through the process and will make an application on behalf of you.
Q.1 What is the Partnership Firm?
Partnership firm is an organization of two or more persons managed by anyone or all of them with intention to run business or industry and share the profits.
Q.2 What is the maximum and minimum number of persons to form a partnership firm?
There must be minimum of 2 persons to form a partnership firm. If the firm is intended for financial transactions maximum of 10 and for other purposes maximum of 20 persons can form a firm (See Sec.11 (2) of Company law).
Q.3 Should a partnership firm be registered?
Not necessarily. However, unless a partnership firm is registered with the registrar of firms and societies, the rights of the partners inter se or against strangers cannot be enforced in a court of law. If the partnership deed itself creates, transfers or affects an interest in immovable property.
Q.4 Is a partnership deed necessary to form a partnership firm?
No, it is not necessary. However, it is often prudent to make a partnership deed to produce to the bank, income tax authorities and to clients with whom the partnership firm deals with.
Q.5 Can a partnership firm be constituted for a particular business undertaking?
Yes. A person may become a partner with another for a single adventure or undertaking.
Q.6 What are the acts that all partners should give express consent to do?
Submitting a suit for arbitration, transfer of immovable property, acquisition of immovable property, withdrawal of suits is all forbidden except by the consent of all partners or by the usage of custom to the contrary.
Q.7 is the firm liable for the wrongful act of one partner?
Yes. The firm and all the partners are liable for the wrongful act or fraud which causes loss or injury to any third parties.
Q.8 Does the death of a partner dissolve the partnership firm?
Yes. The death of a partner automatically dissolves the partnership firm. It is however usual for the partnership deed to provide beforehand that the firm should continue in spite of death, retirement or insolvency of a partner.
Q.9 What is a partnership at will?
When the partnership deed does not contain any provision for the duration of the partnership nor conditions for the termination of partnership, it is a partnership at will.
Q.10 What is the legal status of partnership property?
Any property can be treated as the property of the firm by simply showing it as such in the book of accounts. This would constitute partnership property and all partners are joint owners of the partnership property as increased or decreased by profits in the course of business. Property belonging to an individual partner does not become the firm’s property simply by being used for the purpose of the partnership.