Partnership Firm
The Indian Partnership Act, 1932 governs and regulates partnership firms in India. The persons who come together to form the partnership firm are known as partners. The partnership firm is constituted under a contract between the partners. The contract between the partners is known as a partnership deed which regulates the relationship among the partners and also between the partners and the partnership firm.
Benefits of Private Limited Company Registration in India
- Easy to Incorporate: The incorporation of a partnership firm is easy as compared to the other forms of business organisations. The partnership firm can be incorporated by drafting the partnership deed and entering into the partnership agreement. Apart from the partnership deed, no other documents are required. It need not even be registered with the Registrar of Firms. A partnership firm can be incorporated and registered at a later date as registration is voluntary and not mandatory.
- Quick Decision: The decision-making process in a partnership firm is quick as there is no difference between ownership and management. All the decisions are taken by the partners together, and they can be implemented immediately. The partners have wide powers and activities which they can perform on behalf of the firm. They can even undertake certain transactions on behalf of the partnership firm without the consent of other partners.
Document Required
- Before starting partnership firm points must be followed by partners:
- Drafting of Partnership Deed.
- Minimum two members as partners.
- Maximum of equal to or less than twenty partners.
- Selection of appropriate name.
- Principal Place of business.
- PAN card and bank account of the firm.
- The documents required to be submitted to Registrar for registration of a Partnership Firm are:
- Application for registration of partnership (Form 1)
- Certified original copy of Partnership Deed.
- Specimen of an affidavit certifying all the details mentioned in the partnership deed and documents are correct.
- PAN Card and address proof of the partners.
- Proof of principal place of business of the firm (ownership documents or rental/lease agreement).
- If the registrar is satisfied with the documents, he will register the firm in the Register of Firms and issue a Certificate of Registration. Register of Firms contains up-to-date information on all firms and can be viewed by anybody upon payment of certain fees.
Details Required in a Partnership Deed
- General details
- Name and address of the firm and all the partners.
- Nature of business.
- Date of starting of business Capital to be contributed by each partner.
- Capital to be contributed by each partner.
- Profit/loss sharing ratio among the partners.
- Specific details
Apart from these, certain specific clauses may also be mentioned to avoid any conflict at a later stage:
- Interest on capital invested, drawings by partners or any loans provided by partners to the firm.
- Salaries, commissions or any other amount to be payable to partners.
- Rights of each partner, including additional rights to be enjoyed by the active partners.
- Duties and obligations of all the partners.
- Adjustments or processes to be followed on account of retirement or death of a partner or dissolution of the firm.
- Other clauses as partners may decide by mutual discussion.