Partnership Firm Registration
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What is a Partnership Firm ?
A partnership firm is regulated by The Indian Partnership Act, 1932. A partnership firm is where two or more persons come together to form a business and distribute the profits/losses at the agreed ratio. The partnership business includes any kind of trade, occupations and professions. A partnership firm is easy to form & dissolve with fewer compliances as compared to LLP and companies.
The persons who come together to form the partnership firm are knowns as partners. The partnership firm is constituted under a contract between the partners. The contract between the partners is known as a partnership deed which regulates all the terms and conditions among/between the partners and the partnership firm.
Advantages of Partnership Firm ?
- Easy to form and dissolve:- The incorporation of a partnership firm is easy to incorporate as compared to the other forms of business organisations (LLP/companies). The partnership firm can be incorporated by drafting the partnership deed and entering into the partnership agreement. Other than the partnership deed, no other documents are required. Even, it is not mandatory to register the partnership deed with the Registrar of Firms.
- Less Compliances:- The operational and statutory compliances are lesser as compared to LLP and companies. They do have any legal restrictions on their activities. It is cost-effective, and the registration process is cheaper as compared to a company or LLP. The dissolution of the partnership firm is also easy and does not involve many legal formalities to be done.
- Quick Decision making:- In partnership firms, it is seen that the decision made are way much more faster than other business organisations. All the decisions are taken by the partners together, and they can be executed and implemented immediately.
- Burden on Partners:- As the partners shares the profits and losses according to the mutual consent mentioned in Partnership Deed. Their profit and losses are limited. In case of losses, the liability of each partner will also be minimized.
Importance of Registering a Partnership Firm
The registration of a partnership firm is optional and not compulsory under the Indian Partnership Act. It is at the discretion of the partners and voluntary. The firm’s registration can be done at the time of its formation or incorporation or during the continuance of the partnership business.
However, it is always advisable to register the partnership firm as a registered firm enjoys certain special rights and benefits as compared to the unregistered firms. The benefits that a partnership firm enjoy are:
- A partner can sue against any partner or the partnership firm for enforcing his rights arising from a contract against the partner or the firm. In the case of an unregistered partnership firm, partners cannot sue against the firm or other partners to enforce his right.
- The registered firm can file a suit against any third party for enforcing a right from a contract. In the case of an unregistered firm, it cannot file a suit against any third party to enforce a right. However, any third party can file a suit against the unregistered firm.
- The registered firm can claim set-off or other proceedings to enforce a right arising from a contract. The unregistered firm cannot claim set off in any proceedings against it. However, it is always advisable to register the partnership firm as a registered firm enjoys certain special rights and benefits as compared to the unregistered firms. The benefits that a partnership firm enjoy are:
Self Attested PAN Card & Aadhar Card Copy of all partners
Self attested address proof of all partners (Utility Bill/ Bank Statement/ Bank passbook copy/ Driving License/Passport)
Passport size colour photo of all partners in JPEG Format
Proof of office address
Contact Number and Mail-Ids of all partners
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