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PARTNERSHIP FIRM
What is a Partnership Firm?
A Partnership business is a business model in which at least 2 or more individuals manage and operate a business based on the terms and conditions set in Partnership Deed. Obtaining partnership registration is easy and is usually used by small and medium scale businesses.
For Partnership Registration, you must agree on a firm/business name and then you would be required to establish a partnership deed to avoid contradictions in the future within the partner itself. This is a document stating the respective rights and obligations of the partners. This partnership deed should be written and not oral. The terms and conditions mentioned in the Partnership Deed can vary to suit the interests of partners and can even be made contrary to the Indian Partnership Act, 1932 but on any terms, if the Partnership Deed is silent, then provisions of the Act would apply.
What are the different types of Partnership?
There is no formal type of Partnership, but Partnership firms can be classified as a registered Partnership or an unregistered Partnership.
As per the Indian Partnership Act, 1932, (Act), the only criteria to start a business as a partnership is to create a Partnership Deed among the Partners. It is not mandatory for the partnership deeds to get registered, that is, they do not require the Partnership Firm to be a registered Firm. Therefore various partnership businesses exist as an unregistered firm.
There are no penalties imposed on non-registered partnership firms, and a partnership firm can even be registered after formation based on the partners will.
However, unregistered partnership firms cannot claim for certain rights which is denied in Section 69 of the Partnership Act. It deals with the effect of non-registration of a partnership firm.
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Pricings
STARTUP
1489
- PARTNERSHIP DEED
- STAMP PAPER PURCHASE
- MSME /UDHYAM REGISTARTION
- GST REGISTRATION
- PAN CARD
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Executive
6989
- PARTNERSHIP DEED
- STAMP PAPER PURCHASE
- ACCOUNTING SOFTWARE
- GST REGISTRATION
- 3 MONTH GST RETURN
- PAN CARD
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PREMIUM
10989
- PARTNERSHIP DEED
- STAMP PAPER PURCHASE
- ACCOUNTING SOFTWARE
- GST REGISTRATION
- SHOP ACT REGISTRATION *
- 6 MONTH GST RETURN
- TRADEMARK FILING
- PAN CARD
- TAN
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Advantages
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It is comparatively inexpensive as compared to Company registration and LLP registration. You can run your firm without registration as well by just drafting a partnership deed.
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Forming a partnership firm is quite easy, as you can start doing your business once you have your own partners and after you have drafted the partnership deed.
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If you register your firm with your partnership deed or partnership agreement then if your partner or firm goes against the clause mentioned in the deed or agreement then you have the right to sue the firm or partners.
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When you fall into any crisis or have to make a decision in a short time you will have your partners as your advisors which will give you an edge over being alone to make decisions. It also eases up operations at times.
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Responsibilities in Partnership registration are equivalent. Even in the absence of 1 partner others can take important calls for any particular crisis.
Disadvantages
In case of unregistered partnership firm, the partners cannot file a suit in any court against the firm, or they can't sue their other partners for enforcement of any rights arising from conflicts of contract or rights conferred by the Partnership Act.
There is no suit to enforce a right arising from agreement which can be instituted in any Court on behalf of a firm against any third party unless the firm is registered.
Partnership firms do not provide partners with limited liability protection and they do not have perpetual existence.
Interest of Partner in Partnership firms cannot be easily transferable.
Ownership structure does not allow any kind of investment from Venture Capitalists, Angel Investors or Private Equity Firms.
FAQs Section
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A minimum of 2 or more partners is required to form a partnership firm.
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PAN Card, identity proof along with address details for the Partners should be required. You would also need to draft a Partnership deed and get it signed by all the partners in the firm.
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Partnership firms are registered by the Registrar of Firms, under the Indian Partnership Act.
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He Partner should be an Indian citizen and should be Resident of India.
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There are few constraints for transferring a partnership from one partner to another person. A partner who wishes to transfer his partnership should get unanimous consent from all other partners.
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Yes, you can convert the Partnership business into Company or LLP at a later date. However, the procedures to convert a Partnership firm into a Company or LLP are quite difficult, expensive, and time-consuming.
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When the Partnership firm is registered, the Partnership deed will be registered along with it, and the Registration Certificate will be issued by the Registrar of Firms.
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