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Partnership Firm Registration

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Why Should I Use Auriga Accounting For Partnership Firm Registration?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your Partnership Firm.

book appointment

Our team of experts will get in touch with you and collect all necessary documents and details

Resolve all your queries

We fill out and file your application for registration

Complete your registration

Your Partnership Firm is registered

Why Should I Use Auriga Accounting For Partnership Firm Registration?

Auriga Accounting has a team of registration experts who can provide complete guidance to register your Partnership Firm.

book appointment

Our team of experts will get in touch with you and collect all necessary documents and details

Resolve all your queries

We fill out and file your application for registration

Complete your registration

Your Partnership Firm is registered

WHAT IS PARTNESHIP FIRM??

PARTNERSHIP FIRM – it’s legal agreement between 2 or more people who agreed to share profit of business under SECTION 4 of Indian partnership act. Partnership consist 3 elements.

  • It must be result of an agreement between 2 or more people.
  • Business run by all or any of them representing the rest
  • Agreement must be built to share the profit and loss.

ELIGIBILITY OF PARTNERSHIP FIRM

  • Number of partners: A partnership firm must have a minimum of two partners. There is generally a maximum limit on the number of partners, which varies based on the jurisdiction or the partnership agreement.
  • Competency: All partners must be competent individuals who are legally capable of entering into a contract. Minors, insolvent individuals, and persons of unsound mind are generally not eligible to be partners.
  • Consent: The partners must have mutual consent to form a partnership and carry on a business together. This consent is usually expressed through a partnership agreement.
  • Legal formalities: While partnership firms do not require extensive legal formalities for formation, it is advisable to draft and execute a partnership deed. The partnership deed outlines the terms and conditions of the partnership, including capital contributions, profit-sharing ratios, decision-making processes, and rights and responsibilities of the partners
  • Registration (optional): Depending on the jurisdiction, partnership firms may or may not be required to be registered. While registration is not mandatory, it is recommended as it provides certain legal benefits and protections.

ADVANTAGES

  • Easy formation: Partnership firms can be formed with relative ease and minimal legal formalities. While it is recommended to have a written partnership deed, even an oral agreement can create a valid partnership.
  • Shared resources and expertise: Partnership firms allow for pooling of financial resources, skills, and expertise of the partners. This shared investment and knowledge can help in the growth and success of the business.
  • Flexibility in decision-making: Partnerships offer flexibility in decision-making as all partners have the right to participate in the management and decision-making processes. This allows for quick decision-making and adaptability to changing business conditions.
  • Division of profits and losses: The Partnership Act provides guidelines for the distribution of profits and losses among the partners. Partners can agree upon profit-sharing ratios based on their contributions and efforts, promoting fairness and transparency.
  • Taxation benefits: Partnership firms enjoy tax advantages compared to certain other forms of business entities. The firm itself is not taxed; instead, the partners are individually taxed based on their share of profits, which may be advantageous .
  • Joint liability: Partners in a partnership firm have joint and several liability, meaning they share the responsibility for the firm’s debts and obligations. This joint liability can provide a sense of security to creditors and may make it easier to secure financing for the business.
  • Continuity and succession: The Partnership Act allows for the partnership to continue even in the event of the death, retirement, or withdrawal of a partner. The remaining partners can continue the business by entering into a new partnership agreement or making necessary adjustments.
  • Confidentiality: Unlike public companies, partnership firms are not required to disclose their financial statements or other confidential information to the public. This provides privacy and confidentiality for the partners and their business operations.

     

Minimum Requirement

  • Minimum 2 people
  • maximum 20 people

TYPES OF PARTNERSHIP

There are three types of partnership

  1. Particular partnership
  2. Partnership at will
  3. Limited liability partnership

Particular Partnership:

 A particular partnership you can say as temporary partnership in which the partnership has mutually decided to end on a specific date. Instead of a date, partners or firm can also decide to dissolve the partnership when the specific objective of the partnership is achieved.

Partnership at Will:

  • A partnership in which has all the partners mutually agree on holding on partnership.
  • When a partnership firm is created without deciding any specific time limit of its partnership, it is called partnership at will.
  • In a partnership at will individual partners can mutually decide at a later date when to dissolve the partnership.
  • If individual partners dissolve the partnership then the profit earned by firm will be considered as partners’ income.

Limited liability partnership:

  • A limited liability partnership in which all the partners have limited liability. The limited liability partnership is governed by the limited liability partnership act 2008.
  • In LLP if partners are bound their personal assets at a stake to clear the company’s debt. It will be illegal. 

TYPES OF PARTNERS IN PARTNERSHIP FIRM

There is different types of partners in partnership firm

  • Active Partner: an active partner which is include in day to day activities of business operation and always present in business meetings.
  • Dormant Partner: a partner who takes no share in the active business of a company or partnership. It is also knows as sleeping partner or silent partner.
  • Nominal Partner: a nominal partner neither invest money not takes active participation in business, they are simply face of the company to add goodwill of the firm.
  • Minor Partner: a minor partner who is less than 18 years old. And they can’t file the suit against the partners. He/ She has does not have share on loss but only in a profit.
  • Partners in profit only: such a partner becomes a partner with the agreement of all partners that they will not be liable to losses of a firm.
  • Secret Partner: a secret partner invest money in the business and has a say in the say to-day operation. They keep their identity secret and don’t want to let anyone know in the firm.
  • Sub- partner: a sub-partner who agrees to share his profit in a partnership firm with an outsider to the firm. These kind of partner does not hold any right against the firm nor any liable to any debt caused by firms.
  • Partner by estoppel: When a person either verbally or in written form tells a client he/she is a partner and receives credit or some other favour, he/she will be legally considered as a partner by estoppel.

A partner by estoppel also knows as presumption of partnership.

CHARACTERSTCIS OF PARTNERSHIP FIRM

  • AGREEMENT– Partnership is start on mutual contract between partners who decides to run business, which is known as agreement. In partnership agreement, the partners are equally responsible for debt of the organization.
  • NUMBER OF PARTNERS- According to section 11 of Indian partnership act 1932, in partnership there is there must be minimum 2 people and maximum 20 people who decides to run business.
  • SHARE OF PROFIT– Is the most important feature of partnership that how will partner share their profit between among the partners. The partners will share their profit between among them as per agreed ratio.
  • LIABILITIES – Partners are subject to liabilities. It means all the partners are collectively responsible all debt of the firm. Even if they have to liquidate their personal assets.

STEPS FOR REGISTERING PARTNERSHIP FIRM

  • Choosing the name of the company
  • Draft the partnership deed
  • Execution of the partnership deed
  • Preparation of document
  • Submission of registration application
  • The approval & issuance of the registration certificate

DOCUMENTS REQUIRED TO START PARTNERSHIP FIRM

  • Application form (Form 1)
  • Specimen of the affidavit, duly filled
  • A certified true copy of the partnership deed
  • PAN cards of all the partners
  • Aadhaar card/voter ID card of all the partners
  • PAN card in the name of the business
  • GST registration certificate of the business
  • Rent agreement
  • Details of the current bank account of the business.

PROCESS

  • Select a name: Choose a unique name for your partnership firm that does not infringe upon any existing trademarks or business names. Ensure that the chosen name does not violate any rules or guidelines set by the local authority.
  • Prepare a partnership deed: Draft a partnership deed that outlines the terms and conditions of the partnership. The deed should include details such as the firm’s name, nature of business, names and addresses of partners, capital contributions, profit-sharing ratios, decision-making processes, and rights and responsibilities of the partners.
  • Stamp duty: Purchase the necessary stamp paper(s) of appropriate value as per the stamp duty rates prescribed by your state government. The partnership deed should be written on the stamp paper.
  • Notarization: Get the partnership deed notarized by a notary public. The notary public will verify the identities of the partners and witness the signing of the partnership deed.
  • Application for registration: Prepare an application for registration of the partnership firm. The application should include the following information
    1. Name of the firm
    2. Location of the firm’s principal place of business
    3. Names and addresses of all partners
    4. Date of commencement of the partnership
    5. Duration of the partnership, if it is a fixed-term partnership
  • Submission of documents: Submit the following documents along with the application for registration:

    1. Partnership deed on stamp paper
    2. Application for registration
    3. Affidavit stating the partnership details
    4. Proof of address (such as utility bills, lease agreement, etc.) for the principal place of business
    5. Copies of identity proofs of partners (such as Aadhaar card, PAN card, passport, etc.)
  • Payment of fees: Pay the prescribed registration fees as per the rules of the respective Registrar of Firms. The fee amount may vary depending on the capital of the partnership.
  • Registrar of Firms: Submit the application, partnership deed, and supporting documents to the Registrar of Firms in your jurisdiction. The Registrar will verify the documents and records and issue a Certificate of Registration.

COMPLIANCES

  • Tax compliances: Partnership firms are typically required to fulfill various tax-related compliances, including obtaining a Permanent Account Number (PAN), filing income tax returns, and paying income tax as per the applicable tax laws. Partners may also need to comply with goods and services tax (GST) obligations, if applicable.
  • Record-keeping: Maintain proper books of accounts, including records of income, expenses, assets, liabilities, and other financial transactions. Partnership firms should also maintain records of meetings, decisions, and any changes in the partnership agreement.

  • Compliance with other applicable laws: Partnership firms must comply with various laws and regulations that are applicable to their specific industry or business activities. These may include labor laws, environmental regulations, licensing requirements, and any other industry-specific regulations.

  • Compliance with other applicable laws: Partnership firms must comply with various laws and regulations that are applicable to their specific industry or business activities. These may include labor laws, environmental regulations, licensing requirements, and any other industry-specific regulations.

WHY AURIGA?

Auriga Accounting Private Limited is always with you we give the best advice related to sole Proprietorship. If our guidance is helpful to you then we are always thankful. Our services are very fast. Our team Communicate with all our clients personally. And solve their problem which related to accounting.

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