What is Partnership Business
It is a business entity that is formed, operated, and managed by a group of individuals named as partners. While most small and medium business persons especially belonging to the unorganized sector, preferred to form a partnership before, the efficacy of this kind of business is steadily losing its relevance due to the popularity and umpteen benefits that a limited liability company enjoys at present
Types of Partnership Firms
- Registered- Functions according to the rules of the Partnership Deed and the ‘Indian Partnership Act’ of 1932. It is possible to take legal action against a partner who violates the code once the business has been registered.
- Unregistered- Depends heavily on the Partnership Deed that can be modified with the concurrence of all partners. However, the partners cannot be sued in a court of law for violating the rules.
Information to be included in the Partnership Deed
Names & addresses of all partners
Date when the business became operational
Capital provided by each partner
Profit sharing percentage for each partner
Rules for adding more partners
Rules for removal of a partner
Rules for dissolving the partnership
Requirements for Registration of a Partnership Business
The firm must include at least two partners
There is no amount specified as the minimum capital required to start a partnership firm
Registration of the company is not mandatory but most legal professionals advise it in order to avoid legal actions taken by any of the partners in future
A partnership deed is required to be prepared that includes all the terms and conditions of the business including profit and liabilities sharing percentage
The partners are considered to be owners of the business and a partnership company is not regarded as a legal entity.
Advantages of registering your business as a Partnership Firm?
Simple, uncomplicated process requiring very less formality
Registration is not mandatory to form and operate a partnership business
However, bigger firms opt to register their business and the formalities are overseen by the ‘Registrar of Firms.’
The company can choose to operate in any name as long as it does not violate the trade mark regulations.
The company is not required to file their accounts annually with the Registrar unlike other business entities.
The firm can sue any partner or a third party for compensation, if it remains unregistered.
It is cost effective and the expenses being considerably lesser than a LLP
Documents required to Register a Partnership Firm Registration
- PAN Card (2 Copies)
- Adhaar Card/ Driving License/Passport (2 Copies)
self attested Address Proof - Voter ID/
4 passport size photographs
self attested Bank Statement/ Electricity Bill/ Mobile Bill/ telephone Bill not older than one month (passbook copy is not accepted)
Rental agreement and electricity bill of office address(Electricity bill not older than 1 month) if rented premises
You will get the documents after Registration of your Company
Partnership Deed Registration