Partnership Firm Registration

ABOUT

What is a partnership firm?

Partnership is a common form of business. Two or more people come together to carry on a business and share the profits and losses. Liability of the partners in a partnership firm is joint and several.

A partnership firm is not a separate legal entity distinct from its memebers. It is merely a collective name given to the individuals composing it. Hence, unlike a company which has a separate legal entity distinct from its members, a firm cannot possess property or employ servants, neither it can be a debtor or a creditor. It cannot sue or be sued by others.

how it work

What are the Benefits of Partnership Firm ?

Existence of an agreement

Partnership is the outcome of an agreement between two or more persons to carry on business. This agreement may be oral or in writing. The Partnership Act, 1932 (Section 5) clearly states that “the relation of partnership arises from contract and not from status.

Existence of business

Partnership is formed to carry on a business. As stated earlier, the Partnership Act, 1932 [Section 2 (6)] states that a “Business” includes every trade, occupation, and profession. Business, of course, must be lawful.

Sharing of profits

The purpose of partnership should be to earn profits and to share it. In the absence of any agreement, the partner should share profits (and losses as well) in equal proportions.

Contractual Relation

The partnership business may be carried on by all or any of them acting for all. Thus, the law of partnership is a branch of the law of Agency. To the outside public, each partner is a principal, while to the other partners he is an agent. It must, however, be noted that a partner must function within the limits of authority conferred on him.

Membership

The minimum number of persons required to constitute a partnership is two. The Act, however, does not mention the upper limit. For this a recourse has to be taken to the Companies Act, 1956 [Section 11 (1) & (2)]. It states that the maximum number of persons is ten, in case of a banking business and twenty, in case of any other business.

Nature of liability

The nature of liability of partners is the same as in case of sole proprietorship. The liability of partners is both individual and collective. The creditors have a right to recover the firm’s debts from the private property of one or all partners, where firm’s assets are insufficient.

Fusion of ownership and control

In the eyes of law, the identity of partners is not different from the identity of partnership firm. As such, the right of management and control vests with the owners (i.e., partners).

Non-transferability of interest

No partner can assign or transfer his partnership share to any other person so as to make him a partner in the business without the consent of all other partners.

Registration of firm

Registration of a partnership firm is not compulsory under the Act. The only document or even an oral agreement among partners required is the ‘partnership deed’ to bring the partnership into existence.

Facts

Our Advantages

Sharing of risk

Risk is shared amongst the partners.

Better Management

Better management of business can be done as the number of persons managing the business are more.

Larger resources

More resources can be procured from all the partners when compared to sole proprietorship.

Ensures secrecy

The statement of accounts of the firm need not be published and this ensures secrecy.

Easy to form

A partnership firm is easy to form. An oral or written agreement between the partners is all that is needed to start a partnership.

What is the Process

for Partnership Firm Registration Online ?

Draft a partnership deed

A deed of partnership is required to be made out and registered under the Indian movable property Act together with other movable properties involved.

Fill Form 1

This is the Prescribed Registration Form for Incorporation of a firm. It should be filled and along with documents to be submitted to ROF

Submission

Submit the duly filled Form 1, stamped partnership deed and Lease agrrement to RoF(Registrar of Firms)

Certificate of registration is issued by RoF

After verification of all Submitted documents, RoF will issue Certificate of Registration

Frequently Asked Questions (FAQ)

Common Questions You Need To Know

What is partnership?

Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.

IS a written partnership agreement required for every partnership?

No. However, it is usually a good decision for partners to work out the details of the partnership and create a written agreement. If you do not, the state’s rules regarding partnerships will govern your partnership.

What is the Minimum capital of a partnership firm?

Capital is the initial amount in cash or kind contributed by the partners to start the business. There are no such guidelines on minimum capital by partners. It is not necessary for each partner to contribute equally to the capital. The contribution is based on the agreement between the parties.

What is the difference between a partnership and a limited partnership?

A limited partnership must have at least one general partner. … General partners are also subject to unlimited personal liability for the debts of the business. Thegeneral partners of a limited partnership are also jointly and severably liable for the debts of the business, just like partners in a general partnership.

What is the law of partnersip?

A partnership is a for-profit business association of two or more persons. Because the business component is defined broadly by state laws and because “persons” can include individuals, groups of individuals, companies, and corporations, partnerships are highly adaptable in form and vary in complexity.

Can a partnership firm be converted into private limited company?

Yes, a partnership firm can be converted into private limited company by following the procedure laid down in Companies Act 2013.

How are partnerships taxed?

A partnership does not pay any income taxes. Instead, partnership income “passes through” the business to the partner. Each person then reports his or her share of business profits or losses on an individual federal tax return

What are the types of foundation of partnership firm?

A partnership is a business owned by two or more people. There are three different types of business partnerships:

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.

Is a partnership better than a sole proprietorship?

Partnerships can be very similar to Sole Proprietorships in the sense that the business is not necessarily an independent entity; in the simplest form ofPartnership, all partners contribute capital and all are fully liable for business debts. … The Partnership Agreement is merely a way to share Sole Proprietorship.