Partnership Firm Registration

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Partnership Firm Registration

  • Partnership Deed Drafting
  • GST Registration

Market Price – Rs: 9,899 

OnlineTaxSeva Price- Rs: 5,699 (All Inslusive)

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“Note: Please talk to an advisor first and get all doubts resolved before proceeding with payment. Once we receive the payment, our team will reach out to you and work on the service.”

 

Copy Right Registration Service

Documents Required For Partnership Firm Registration

Pan Card
PAN of Partners
Aadhar Card

AADHAR of Partners
Rental Agreement

Details Of Partnership Firm Registration

The Indian Partnership Act of 1932 specifies the laws that apply to partnership firms in India. This Act establishes the rights and obligations of the partners with respect to one another as well as those legal relationships with third parties that arise incidentally from the creation of a partnership. In legal and contractual relationships arising out of and in the course of a partnership firm’s operation, the Act establishes the position of a partner as well as a partnership firm towards third parties.

Partnership

“Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all”.

In a partnership firm, two or more people come together to carry out a business for the purpose of earning profits and sharing those profits. The partners combine their capital resources and work jointly to carry on the business. According to Section 12 of the Indian Partnership Act, a partnership must be formed for the purpose of carrying a business that is legal in nature. Co-ownership of a property is not considered as a partnership.

Essentials of a Partnership

  • There must be an agreement between the partners to carry on the business of the partnership firm.

  • The aim of the formation of the partnership should be to earn profits and share them among partners. The sharing of profit and losses can either be according to the ratio of the capital contributed by each partner or be equally among all the partners unless otherwise specified.

  • The partnership agreement must state that the business will be jointly carried on by all of them or some of them acting on the behalf of all. According to Section 13 of the Partnership Act, 1932, the mutual agency exists between the partners. Every partner in a partnership acts as a principal as well as an agent for other partners. The actions of a partner are binding on the actions of all the other partners.

  • Unlimited Liability- The partners can be held liable jointly for any debts of the firm. They have an unlimited liability that extends to their private assets for the disposal of the firm’s debts.

     

    Types of Partnership

    1. General Partnership- In this Partnership, the partners equally participate in the day-to-day activities and decision-making prospects of a firm. At the same time, they are equally responsible for all profits, liabilities and debts of the company. If one partner is found guilty for any discrepancy in business, the others will be held accountable for the same. 

    2. Limited Partnership- A Limited Partnership includes one or more than one partners whose liabilities are limited. A limited partner usually takes his/her share of profit without involving in daily managerial activities and decision making. Because of the limited liabilities, they don’t have to bear the loss incurred upon business. 

    3. Limited Liability Partnership- In LLP, liabilities on partners are limited. They are not responsible for any legal and financial crisis of a firm. An LLP partner is somewhat similar to a Limited partner although they are not the same. 

    4. Partnership at Will- Such Partnership solely depends on the will of a partner. He/she can break the bond anytime they wish. This type of Partnership is usually created for lawful business which usually lasts for an indefinite time.

    Types of Partners

    1] Active Partner/Managing Partner

    An active partner is also known as Ostensible Partner. As the name suggests he takes active participation in the firm and the running of the business. He carries on the daily business on behalf of all the partners. This means he acts as an agent of all the other partners on a day to day basis and with regards to all ordinary business of the firm.

    Hence when an active partner wishes to retire from the firm he must give a public notice about the same. This will absolve him of the acts done by other partners after his retirement. Unless he gives a public notice he will be liable for all acts even after his retirement.

    2] Dormant/Sleeping Partner

    This is a partner that does not participate in the daily functioning of the partnership firm, i.e. he does not take an active part in the daily activities of the firm. He is however bound by the action of all the other partners.

    He will continue to share the profits and losses of the firm and even bring in his share of capital like any other partner. If such a dormant partner retires he need not give a public notice of the same.

    3] Nominal Partner

    This is a partner that does not have any real or significant interest in the partnership. So, in essence, he is only lending his name to the partnership. He will not make any capital contributions to the firm, and so he will not have a share in the profits either. But the nominal partner will be liable to outsiders and third parties for acts done by any other partners.

    4] Partner by Estoppel

    If a person holds out to another that he is a partner of the firm, either by his words, actions or conduct then such a partner cannot deny that he is not a partner. This basically means that even though such a person is not a partner he has represented himself as such, and so he becomes partner by estoppel or partner by holding out.

    5] Partner in Profits Only

    This partner will only share the profits of the firm, he will not be liable for any liabilities. Even when dealing with third parties he will be liable for all acts of profit only, he will share none of the liabilities.

    6] Minor Partner

    A minor cannot be a partner of a firm according to the Contract Act. However, a partner can be admitted to the benefits of a partnership if all partner gives their consent for the same. He will share profits of the firm but his liability for the losses will be limited to his share in the firm.

    Such a minor partner on attaining majority (becoming 18 years of age) has six months to decide if he wishes to become a partner of the firm. He must then declare his decision via a public notice. So whether he continues as a partner or decides to retire, in both cases he will have to issue a public notice.

Partnership Firm Registration FAQ’s

1.How does a partnership get registered?
In India, registering a partnership involves submitting an application to the Registrar of Companies in accordance with the Indian Partnership Act, 1932, to formally establish a partnership business. The partnership firm’s name, address, partner information, and the terms and conditions of the partnership agreement are among the information that must be provided as part of the registration procedure.

2. Does a partnership have to be registered?
In India, it is not necessary to register a partner with a partnership business. A supplementary agreement should be signed and the partnership deed should be modified whenever a new partner enters the partnership business. While it is not necessary to register partners, the Indian Partnership Act, 1932 requires that the partnership firm be registered with the Registrar of Companies.

3. Who is eligible for partnership?

Individual: Any person who is of sound mind, not a minor, not an undercharged insolvent, and not disqualified from entering into a contract by law can become a partner in a partnership firm.
Firm: A registered partnership firm can become a partner in another partnership firm.

Hindu Undivided Family (HUF): If the Karta of a HUF has contributed his self-acquired or personal expertise and labour to the partnership company, he may do so in that capacity.
Company: Corporations are legal individuals who, if their objectives permit it, may join as partners in a partnership company.
Trustees: Unless prohibited by their bylaws or purposes, trustees of private religious trusts, family trusts, and Hindu mutts may join into partnerships.

4. What initial investment is needed to form a partnership?
With any amount of funding, a partnership business may be established. As such, there is no minimal standard.

5. What are the advantages of registering a Partnership firm?

It is very advisable to register a Partnership firm as a Registered Partnership Firm can file a suit in any court against any of the Partners or firm for the enforcement of any right arising from the contract referred by the Partnership Act. Also, only a Registered Partnership Firm can claim set-off or other proceedings in a dispute with a party.

6. Why should a partnership business be registered?
It is highly advised to register a partnership firm because a registered partnership firm has the legal right to initiate a lawsuit in any court against any partner or company to enforce any rights derived from the partnership agreement as defined by the Partnership Act. Also, the only entity that may assert set-off or other procedures in a dispute with a party is a Registered Partnership Firm.

6. Are partnerships businesses treated as distinct legal entities?
The law treats the partnership firm and the partners as one entity. In partnership firms, the partners’ responsibility is likewise unrestricted, and they are all considered to be jointly and severally accountable for the firm’s debts. As a result, No Partnership company lacks a unique legal existence.

7. Is it compulsory for partnership firms to file income tax returns?
A Partnership Firm must file the returns of Income irrespective of the number of profits or losses made by the Partners.

8. Is it possible to switch to a partnership firm?
The transfer of an ownership stake in a partnership firm is subject to limitations. Without the approval of the other partners, a Partner may not transfer his or her stake in the company to any third party.

9. What is a Partnership deed?
A Partnership deed is an agreement between the Partner that highlights the terms and the rules of the Partnership among the Partners.

10. Why is a Partnership Deed Required?
All of the Partnerships’ Terms & Conditions are outlined in the Partnership Deed. because it establishes the obligations and rights of each partner. A partnership deed is a highly important legal document.

11. How can I transfer to my partnership firm?
There are restrictions on the transfer of the Partnership Firm. A Partner cannot transfer his / her interest in the firm to anyone without the consent of all other partners.

12. Does a Partnership need to conduct an audit?
Partnerships are exempt from the requirement to annually prepare audited financial statements. But, depending on turnover and other factors, a tax audit can be required.

13.Can I change my partnership firm into a company or LLP?
Absolutely, transforming a partnership business into a company or LLP follows a certain process. The process is time- and labor-intensive, though. An entrepreneur would be advised to think about forming an LLP or a company rather than a partnership.

14. What are the steps to create a bank account for a partnership firm?
In order to create a bank account for a partnership company, a registered partnership deed must be presented, along with identification and residency documentation for each partner.

15. How can Etailed assist you in registering a partnership firm?
In order to assist you in establishing a partnership firm, an associate from Etailed will comprehend your business needs and design the partnership deed. We also assist the partnership businesses in becoming Registered Partnership Firms in accordance with the requirements.

16.How many individuals are needed to form a partnership firm?
A minimum of two members and a maximum of 20 partners are permitted in a partnership business.

17. Who is eligible to join a partnership business as a partner?
A resident of India who is also an Indian citizen is eligible to join a partnership company as a partner. Nonresident Indians and Persons of Indian Ancestry may only invest in a partnership with the government’s approval.

18. What documents are required to register a Partnership firm?

A PAN card must be submitted by the partners in addition to the documents proving their identification and residence. A partnership agreement that must be signed by each partner is advised