Partnership Firm Registration Process in India

Meaning of Partnership Firm

Basically partnership firm is sort of business structure in which minimum two person is required to start the business. Those persons are collectively called partners of the firm.This business is regulated by the law named as Indian Partnership Act 1932. This law came into existence when people faced a lot of drawbacks of sole proprietorship business.

For doing the business one needs to various resource that a single individual cannot arrange so the concept of partnership came and gradually this became the favourite among the business person who need funds, capital, expansion and skills which is limited in case of sole proprietorship.

In partnership firm one can grow its business by involving other person and using their reserves and expertise. In partnership business, partners join hands together to share the profits as well as losses mutually and to multiply their occupation. Whereas in proprietorship, all losses is to be bear by the proprietor and no sharing of profit as well. Partnership company registration hasstress-free process and not involved that much compliance as compared to big organisation.

Attributes of Partnership Company

Ø No. of Partners

To start with, minimum two partners must be there. Indian partnership act 1932 has not put any limitation to maximum number of partners. But as per the companies act, 2013 the extreme number of companions in a partnership firm is 100.

Ø Partnership Agreement

A partnership firm gets started when the partners bind themselves through a written agreement. Although the concept of oral partnership is also there but there are many limitations in it. Partnership agreement definesthe rights and responsibilities of all working partners through which business runs by containing the clauses of the name of partnership firm, partner’s details, their profit sharing ratio, nature of business, address of registered office etc. which must be duly notarised on a stamp paper of appropriate value as per the indian stamp act.

Ø Business Activity

Only legal business must be carried out through partnership which is available in india. Its registration is voluntary; it does not mean you can indulge in any business activity through it.

  

Ø Registration

Partnership could be registered or unregistered. Generally this business issuitable for small enterprise in the unorganised sector having multiple promoters. Law is not binding the partners to start business only after getting registration. It totally has the partner’s choice that in which form they wants to proceed.

Ø Collective Management

All partners are allowed to participate in decision making and reach the best level of discussion so that resultant can be finest and profitable. In the main, working partners contribute in day to day management of business.

Ø Not a distinct entity

The status of partnership company registration is not separate legal entity from its partners. It means any change in partner’s lifecycle just like death, bankruptcy can be resultant to dissolution of partnership firm.

Registration of partnership firms: Is it mandatory?

Registration of partnership firms is voluntary. Registered firms get special privileges which are not available to unregistered ones. Legal help is also available to registered partnership firms.

Below are the privileges available to registered partnership firm only. Unregistered partnership has no right to claim any of the advantage as under until they registered themselves with particular registrar of state,

Ø Ability to file case by the partner against the co-partners

When dispute is arises between the partners due to any clause of deed whether its profit sharing, capital contribution or any other matter prevail during the business period then they can get the solution by filing suit to the court of law. Partners of unregistered firm cannot administer any clause of deed without registration.

Ø Power to file case by firm against third party

Partners of registered firm have full right to file cases in court against the third party for resolution of dispute that arises during the business between firm and any other third party. This opportunity is not available to the unregistered firm until the procedure of deed registration is completed. Third party always owns the right to file the suit against the firm whether it’s registered or unregistered.

Ø Power to claim set off

In case any third party file the case against the firm then registered partnership firm has right to claim set-off.

Ø Greater reliability

As per the act, both partnerships are legal and valid but always preference goes to registered one. Registered partnership enjoys the benefit higher reliability and credibility.

Ø Conversion of entity

In future, if partnership wants to convert into other entity just to get the corporate structure then it can do so by getting registered the partnership firm.

Partnership Company Registration Procedure

Registration of partnership firm in India varies from state to state. Appropriate application form needs to be filled up and must be submitted with the registrar of the firms along with the appropriate government fees.

The registration process of the partnership firm

Ø A duly filled up application form along with the appropriate fees must be submitted to the registrar of firm of the concerned state(varies from state to state, here we are talking about Delhi)

Ø Each and every partner is prerequisite to sign the application.

Ø All the documents should be succumbed to the concerned registrar which includes:

·  Application for registration of partnership in the form-1

·  Duly notarised affidavit,which includes the declaration and consent to act as a partner

·  Original partnership deed duly certified,

·  Registered office address proof (ownership proof if owned or rent agreement/ lease agreement if rented or leased property)

·  ID, address proofs of all the partners

·  Passport size photographs with email and mobile number

Ø If the registrar is comfortable with the documents submitted, he will register the partnership firm under his seal and grant the certificate of registration which is the evidence of Partnership Company Registration.Generally Partnership Company registration takes around 7-14 working days or it totally depends upon documents available and at the discretion of the registrar.

So it can be said that for every state, partnership registration process isdifferent and depends upon the state laws.  However brief procedure has been mentioned above which is by and large same. Some states offer Partnership Company registration online.

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