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Partnership

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Partnership

A Partnership Firm is a popular form of business constitution for businesses that are owned, managed and controlled by an Association of People for profit. Partnership firms are relatively easy to start are is prevalent amongst small and medium sized businesses in the unorganized sectors. With the introduction of Limited Liability Partnerships in India, Partnership Firms are fast losing their prevalence due to the added advantages offered by a Limited Liability Partnership.

There are two types of Partnership firms, registered and un-registered Partnership firm. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm due to the added advantages. Partnership firms are created by drafting a Partnership deed amongst the Partners and IndiaFilings can help start a registered or un-registered Partnership firm in India.

Reasons to Register a Partnership

Easy to Start

A Partnership is easy to form as no cumbersome legal formalities are involved. Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain legal benefits. The Registrar of Firms is responsible.

Business Name

Since the name of a Partnership firm is not registered, a Partnership firm can choose to have any name – as long as it does not infringe on a registered trademark. However, since the name is not registered, any other person can do the same business.

Partnership Deed

In a Partnership firm, the partnership deed will determine the ownership of the firm, However, If the profit sharing ratio, rights and responsibilities of each of the Partner. A partnership deed can be registered with the Registrar.

Annual Filing NOT Required

A Partnership firm is not required to file its annual accounts with the Registrar each year unlike a Limited Liability Partnership. Limited Liability Partnership’s and Company’s are required to file their annual accounts with Registrar of Companies.

Bank Account

Bank account can be opened in the name of a Partnership firm. To open bank account, the partnership deed copy and KYC documents of the Partner must be submitted along with any other document as required by the Bank.

Documents Required for Partnership Registration
Identity and Address Proof

Identity and address proof will be required for all directors and shareholders of the company to be incorporated. In case of Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be submitted mandatorily. All documents submitted must be valid. Residence proof documents like bank statement or electricity bill must be less than 2 months old.

Registered Office Proof

All companies must have a registered office in India. To prove access to the registered office, a recent copy of the electricity bill or property tax receipt or water bill must be submitted. Along with the utility bill, rental agreement or sale deed and a letter from the landlord with his/her consent to use the office as a registered office of a company must be submitted.

Partnership Registration FAQs
  1. 1
    How many people are required to start a Partnership firm?

    A minimum of two Persons is required to start a Partnership firm. A maximum number of 20 Partners are allowed in a Partnership firm.

  2. 2
    What are the requirements to be a Partner in a Partnership firm?

    The Partner must be an Indian citizen and a Resident of India. Non-Resident Indians and Persons of Indian Origin can only invest in a Proprietorship with prior approval of the Government of India.

  3. 3
    What are the documents required to start a Partnership firm?

    PAN Card for the Partners along with identity and address proof is required. It is recommended to draft a Partnership deed and have it signed by all the Partners in the firm.

  4. 4
    What is the capital required to start a Partnership firm?

    There is no limit on the minimum capital for starting a Partnership firm. Therefore, a Partnership firm can be started with any amount of minimum capital.

  5. 5
    How will IndiaFilings help me start a Partnership firm?

    An FCPA Associate will understand your business requirements and help you start a Partnership firm by drafting the Partnership deed. Based on the requirements, FCPA can also help register the Partnership deed with the relevant Authorities to make the Partnership Firm a Registered Partnership firm.

  6. 6
    Who will register a Partnership firm?

    Partnership firms are registered by the Registrar of Firms, under the Indian Partnership Act, 1932.

  7. 7
    What are the advantages of a Registered Partnership firm?

    Only a registered Partnership firm can file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act. Also, only a Registered Partnership firm can claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party. Hence, it is advisable for Partnership firms to get itself registered sooner or later.

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