A partnership is a relation between persons competent to make the contract, who agree to carry on a lawful business with a view to private gain".
It is a voluntary organisation of two or more persons who agree to carry on business jointly and share its profits and losses. They combine their money with capital and skills to carry on business together.
The persons who enter into a partnership are individually known as 'partners' and collectively a 'firm.' The name under which they conduct business is called the 'firm name.'
What is Partnership Firm Registration?
Partnership Firm Registration is the procedure through which a partnership firm is officially registered with the Registrar of Firms by its partners. The partners should register the business with the state's registrar of firms. Since registration of a partnership firm is not required, the partners may do so when the firm is created or at any point in the future while it is still in function.
Two or more individuals must join forces as partners, decide on a business name, and sign a partnership deed to register a partnership. However, partners are not permitted to be spouses or members of Hindu Undivided Families. Read more to learn about the procedure for registration of a partnership.
Importance of a Partnership Company Registration in India
According to the Indian Partnership Act, partnership firm registration is elective and not compulsory. It is not compulsory and is up to the partners' choice. The firm may be registered as a partnership company at the time of its establishment, incorporation, or ongoing operation.
However, it is usually desirable to register the partnership firm because registered firms are entitled to several special rights and advantages over unregistered ones. The benefits of a partnership company registration are:
- Enforce his contractual rights against a partner or the firm; a partner may file a lawsuit against any other partner or the partnership itself. Partners cannot file a lawsuit to assert their rights against an unregistered partnership firm or their fellow partners.
- The registered company may sue any third party to enforce a contractual right. An unregistered firm cannot file a lawsuit to enforce a right against a third party. However, any unregistered firm may be sued by any third party.
- The registered business may use setoff or other legal actions to enforce a contractual entitlement. An unregistered company cannot use setoff in any legal action brought against it.
Consequences of Non-Registration of Partnership Company
The following restrictions apply to an unregistered partnership company:
- It cannot bring legal action against a third party.
- It is not allowed to sue any of its partners.
- Partners of an unregistered firm are not permitted to take the firm to court to enforce their legal rights.
- An unregistered firm's partners are immune from lawsuits from other partners. The following rights, however, are unaffected by a firm's lack of registration:
- The right of a partner to file a lawsuit for the firm's dissolution, for the firm's accounts, or to enforce any right or authority to realize the property of a dissolving firm
- The authority of a Receiver or Official Assignee to sell an insolvent partner's assets.
- The firm's or its partners' rights in the absence of a place of business.
- Any lawsuit or setoff where the claim is less than one hundred rupees.
- A third party can file a lawsuit against an unregistered company or its partners.
- The procedure for registration of a partnership in India
Step 1: Application for Registration
The Registrar of Firms in the State where the company is located must get an application form and the needed fees. All partners or their ambassadors must sign and confirm the registration application.
The following information is to be included in the application, which can be delivered physically or transmitted by mail to the Registrar of Firms:
- The name and address of the company
- The address of any more locations where the company conducts business
- The day that each partner joined.
- The full names and addresses of each partner
- The company's lifespan.
Step 2: Choosing the Partnership Company's name:
Any name can refer to a partnership firm. But some requirements must be met when choosing the name:
- The name shouldn't be too similar or identical to another company already operating in the same industry.
- Emperor, empress, empire, crown and any other words that suggest government authorization or support should not be used in the name. This is the most crucial step in the procedure for registration of a partnership.
Step 3: Registration Certificate:
The partnership company will be registered in the Register of Firms and given the RO(Registration Certificate) if the Registrar is happy with the registration application and supporting documentation. All firms' most recent and accurate information is open in the Register of Firms, which anybody can access for a fee.
All partners, All partners, or representatives of each partner, must sign the application and submit it to the Registrar of Firms of the State where the company is located with the required fees.
Documents Required for Partnership Company Registration in India
You need to send the following documents to the Registrar for a Partnership Firm Registration online:
- Application for partnership firm registration (Form 1)
- Partnership Deed genuine certified copy.
- A copy of an affidavit testifying that all the information in the partnership deed and other documents is correct.
- PAN card Proof of the partners' and addresses.
- Proof of the company's primary location (ownership paperwork or a rental or lease agreement).
- It is essential to submit all the required documents properly with correct information in the procedure of registration of partnership.
About Partnership Deed
A written contract that each partner has signed is known as a partnership deed. It outlines the conditions that apply to a partnership company.
Contents of a partnership deed in general
Typically, a partnership deed will include the following clauses:
- The company's name.
- The company's line of business.
- The main business location.
- Partnership duration, if any.
- Partners' names and addresses.
- The capital each partner is expected to contribute.
- The maximum each partner may withdraw.
- The ratio of profit-sharing.
- The interest rate, if any, on the capital and the withdrawals.
- The number of partners' salaries or commissions.
Checklist for Partnership Company Registration Online
- Drafting of Partnership Deed
- A minimum of two partners, not less than that
- Maximum of twenty partners, but no more
- Choosing a suitable name.
- The primary location of a business
- PAN card and company bank account.
Now that you are aware of the procedure for registration of a partnership, you can commence your business venture with your partners. In case you encounter any challenges while attempting to do it on your own, you can seek assistance from Lawgical India. We have a team of skilled experts who can ensure a seamless completion of the registration process for you.
