When two entity who has agreed to create a business where they agreed to share profit and loss of the business known as a partnership firm. In India partnership is the most preferable business because of the ease of formation and minimum regulatory compliance, also the concept of partnership act was introduced in 1932 (before the independence).
Types of partnership
- Registered partnership
- Unregistered partnership, in term of the India partnership Act, 1932
The act doesn’t require registering the partnership deed/firm. In India, many partnership businesses were an unregistered firm. A partnership firm can anytime register themselves as there are no penalties, however, according to the Partnership Act 1932, section 69 doesn’t provide the certain right to the unregistered firm:
- The unregistered firm can’t sue any partners/Firms.
- Any partners of an unregistered firm cannot claim or other proceedings in a dispute with 3rd
- But a registered firm can sue and claim from an unregistered firm.
Partnership Firm Registration Process
Partnership firm registration process according to the Indian Partnership Act 1932
Name of Partnership
Choosing an appropriate name for a partnership firm which doesn’t assemble any other name registered or not any word which violates the law, we can also check the availability of name through MCA and after deciding the name and logo we can also get the name and logo registered as a trademark so that it can be secured legally,
Drafting a partnership deed to mean the legal document which contains the detail of the right and obligation of each partner along with the detail of firm like:
- Firm name and address
- Name, address, contact no, etc. of each partner
- Business nature ant its activities
- Working time if any
- Each partner contribution
- The ratio of profit which will be shared among partners
Finalize the Deed as Per Format
Finalize the rough deed into the final prescribed format, drafting on the stamp paper with a proper notary and with affixing sign. Of each partner * stamp duty payable can be different from one state to another.
PAN application for partnership firm, a partnership firm is not too different from its partner, it is still advisable to very irrespective firms to get their PAN in the name whether your firm or not.
Completion of the application including document-like detail of the firm, necessary information of the firm, partner identity, their contribution, there duties and responsibility, firm location, firms time, and the date for the commencing of business. And after attaching every document each partner will sign the application and notarized it.
Submit the application in the registrar of the company for the registration along with some necessary document:
- Partnership deed certified copy
- Firm PAN
- Partners ID Proof and Address
- Of registered offices like registry paper of property or rent agreement or NOC from the landlord
- Declaration in an affidavit which certifies the correctness of the application.
Fees and Stamp Duty
After submitting the application of registration in the registrar of the company in the prescribed form than at last of the partnership firm registration process we need to pay the fees and the stamp duty for partnership registration. Every state has there owned stamp duty and fees value in which the firm is going to register.
After completing the registration process, the registrar officer will verify the same and issue the certificate of registration of the partnership firm and send it through mail ID.
Characteristics of the partnership
- The advantage of the partnership firm is there is a less or minimum requirement in respect of compliance
- Both registered and unregistered firms do not require to file any annual returns and also, they don’t need to be made available in public.
- An account of the partnership doesn’t require to be audited.
- The interest of partners cannot be easily transferable.
- The income tax return will be filed in form ITR-5 pf firm.
Partnership firms play an important role in the growth and success of new mergers and venture. The motive of the partnership is to share a load of business in terms of duty and responsibility like profit and loss, uncertainty, the survival of the business in the long term