Partnership Registration
How Partnership Firm Registration Work ?
What is Partnership Firm?
A partnership firm is a widely recognized business structure established through the mutual consent of all partners with the goal of earning profit. It is a business entity where two or more individuals come together under a formal agreement, known as a Partnership Deed, to jointly own, operate, and manage the business.
Unlike a company, a partnership firm does not hold a separate legal identity; however, the partners themselves are considered distinct legal entities. This means the partnership firm cannot act as a debtor, creditor, or property owner. In the eyes of the law, the assets, liabilities, and debts of the partnership firm are directly associated with its partners.
Why Choose a Partnership?
- Partnership registration is simple and straightforward.
- It involves minimal compliance requirements.
- Partnership registration is more cost-effective compared to an LLP.
Benefits of Partnership Firm
Various Financial Returns to the Partners
The working partner also receives remuneration in addition to the interest on capital and share of profit as may be agreed by the partners
Pre-Defined Object or Period
A partnership can be formed within a specified period or to complete a specific project or object once the same is completed , the partnership will automatically stand dissolved.
Shared Responsibilities
The partners share the responsibility to work and manage the business together.
Operating Flexibility
There are on limitations or restrictions on the partners in regards to running the business, as long as it is covered it is under the signed agreement.
Why Partnership registration?
Audit not required
Easy to establish
Relatively Inexpensive
Minimal compliances
Minimum requirements for partnership registration
Audit not required
Easy to establish
Relatively Inexpensive
Minimal compliances
Registration procedure of partnership firm
Step1: In step first select an appropriate name for the firm.
Step2: In step second the applicant has to file an application I form 1 of partnership firm registration.
Step3: In step third partnership deed is prepared with the consent of all the partners on the stamp paper. Partnership deed includes-
Capital contribution made by all partners.
Shares/Interest of all the partners.
Other clauses made with mutual consent of all the partners.
Details of the partners and firm such as their name, address, qualification, etc.
Nature of the firm or business activities involved.
Circumstances or process that would be followed in case of death or retirement of any designated partner.
Profit/loss sharing ratio among all the partners.
Details of loans provided by the partners.
Rights, duties, salaries, commissions, or payable amount of the partners.
Step4: In Step fourth submit all the perquisite documents along with the partnership deed you have prepared.
Step5: In step fifth after the submission verification of documents and issuance of registration certificate.
Advantages and disadvantages of partnership firm registration
Advantages of partnership firm registration are as follows:
Easy in decision making
Easy management without any disputes
Easiest business structure
Raising funds
Disadvantages of the partnership firm registration are as follows:
Abrupt dissolution
Unlimited liabilities
Maximum number of members
Less trustworthy for the general public
Documents required for formation of a partnership firm
FAQ’s