A Partnership is one of the most important formulae of a business organization. A partnership firm is where two or more persons come together to form a business and divide the profits in a decided ratio. The partnership business contains any kind of trade, occupation, and profession.
The bond between the partners is known as a partnership deed that controls the relationship among the partners and also between the partners and the partnership firm.
Procedure for Registering a Partnership Firm
Step 1: Application for Registration
An application form has to be filed to the Registrar of Firms of the State in which the firm is located along with agreed fees. The registration application has to be signed and confirmed by all the partners or their agents.
The application can be directed to the Registrar of Firms through post or by hand, which covers the following details:
- The name of the firm.
- The principal place of business of the firm.
- The location of any other places where the firm conveys business.
- The date of joining of each partner.
- The names and permanent addresses of all the partners.
- The duration of the firm.
Step 2: Selection of Name of the Partnership Firm
Any name can be given to the partnership firm, but some conditions are required to be followed while choosing the name:
- The name should not be too similar or identical to the firm which already exists firm doing the same business.
- The name should not cover words like emperor, crown, empress, empire or any other words which show sanction or approval of the government.
Step 3: Certificate of Registration
If the Registrar is gratified with the registration application and the documents, he will register the firm in the Register of Firms and issue the Registration Certificate. The Register of Firms covers up-to-date information on all firms, and anyone can view it upon payment of certain fees.
An application form along with fees is to be submitted to the Registrar of Firms of the State in which the firm is sited. The application has to be signed by all partners or their negotiators.
Documents for Registration of Partnership
The documents which are to be submitted to the Registrar for registration of a Partnership Firm are:
- Application for registration (Form 1)
- Original certified copy of Partnership Deed.
- Specimen copy of an affidavit verifying all the details mentioned in the partnership deed and documents are correct.
- PAN Card and address proofs of the partners.
- Proof of prime place of business of the firm (ownership documents or rental/lease agreement).
If the registrar is satisfied with the documents, he will register the firm in the Register of Firms and issue a Registration Certificate.
Register of Firms comprises up-to-date information on all firms and can be viewed by anybody upon payment of certain fees.
A partnership deed is an agreement between the partners in which rights, duties, profits shares, and other requirements of each partner are mentioned. A partnership deed can be written or oral, though it is always advisable to write a partnership deed to avoid any conflicts in the future.
Details Required in a Partnership Deed
- Name and address of the firm and all the partners.
- Nature of business.
- Date of business commencement Capital to be contributed by each partner.
- Capital to be contributed by each partner.
- Profit/loss sharing ratio among the partners.
Apart from these, some of the specific clauses may also be declared to avoid any conflict at a later stage:
- Interest on capital invested, drawings by partners, or any loans provided by partners to the firm.
- Salaries, commissions, and any other amount to be payable to partners.
- Rights of each partner, including additional rights to be enjoyed by the active partners.
- Duties and obligations of all partners.
- Adjustments or processes to be followed on account of retirement or death of a partner or dissolution of the firm.
- Other clauses as partners may decide by mutual discussion.
Timelines for Partnership Firm Registration
The partnership firm registration process may take approximately 10 days, subject to departmental approval, and reverts from the corresponding department.
Checklist for Partnership Firm Registration
- Enlisting of Partnership Deed.
- Minimum two members as partners.
- Equal to or less than twenty partners.
- Choosing an appropriate name.
- Main Place of business.
- PAN number and bank account of the firm.
FAQs on Partnership Firm Registration
How much time does it take to register a partnership firm?
The registration of a Partnership Firm in India may take up to 12 to 14 working days. However, the time taken to issue a certificate of incorporation may vary as per the regulations of the related state. The registration of a Partnership Firm is subject to government processing time which may depend upon State.
Are there any estates on which partnership can be invalid?
Often, if the partnership agreement is not registered, the court may consider a partnership invalid. If the article of the business is illegal, the court may consider the partnership invalid and dissolve the partnership.
If all partners wish to end the partnership, how can they do so?
If the partners of a firm wish to end the partnership, they can by dissolving the partnership by notice, if it is a partnership of will. A partnership can be liquified in accordance with the terms laid out in the Partnership Deed, or they can do the same by making a detached agreement.
Can my certificate of registration be canceled?
In a certain case, a partnership certification of incorporation can be canceled, this is often termed as termination. A closure can be brought upon automatically when all partners or all partners except one partner are declared insolvent or if the firm is carrying unlawful activities,
What is the scope of liability when it comes to partnerships?
Every partner is equally liable to all the other partners and also independently, for all acts/activities of the firm, during the course of business while he/she is a partner. This means that if a loss or injury is caused to any third party or a penalty is imposed during the course of business all partners will be held responsible even if the damage or loss was caused by one of the partners.