Partnership registration becomes common if you begin a business with other persons as partners. The partnership deed is vital for new ventures. Let us take a look at the procedure and needs for partnership deed along with certain benefits.
How to register a partnership deed
- Create a partnership agreement.
- Notarize the partnership agreement that has been drafted
- The Registrar of Firms must verify the agreement
- Pay the required filing fee
A Partnership Firm is registered under the local Registrar of Firm (RoF). The format may change from state to state. Therefore, let us see the common format of the agreement(online):
- A Drafting of Partnership Deed must be drafted under the Indian Partnership Act, 1932.
- After the deed being verified by the professionals, the deed shall be duly executed by payment of stamp duty as applicable for the concerned State and notarization of the same.
- Later, the deed is executed either by non-judicial stamp paper or by way of franking. Franking is simply but a process of payment of stamp duty through banking channels and it is equivalent to stamp paper.
- Application for PAN can be made before itself. The application of PAN Allotment shall be supported by a copy of the Partnership Deed.
- The registration application of the partnership firm must contain the name of the firm, name of the Partners and their addresses, place of Business, duration or time of Business, etc.
- PAN card
- Address proof
Documents of Firm:
- PAN card
- Address Proof of firm
Additional Documents in case of Registration:
- Partnership deed (certified)
- ID proofs and address proofs of the firm and the partners to the Registrar of Partnerships.
- An affidavit
- Application for registration of partnership
- Any documents needed by the registrar
Let’s now see why the partnership firm has to be registered.
Advantages of having a partnership agreement:
The following are the advantages of registering a partnership deed:
- Formation is easy
- Specialization is great
- Minimum legal restrictions
- Protection to partner’s interests
- Balanced decisions
- Sharing of risks
- An incoming partner can impose his/her right against the remaining partners rather than relying on the honesty of co-partners.
- A partner is permitted to ask for the dissolution of the firm or the accounts of the firm dissolved.
- The registered firm is allowed to claim for its tax benefits under the provisions of Income Tax Acts.
- The power to file the case in a Court by a partner against the firm or other co-partners
- The power to file the case in Court by the firm against 3rd parties
- The power to claim set-off
Types of partners in a partnership firm:
There are 7 types of partners in a partnership firm. They are as follow:
- Working partner
- Dormant partner or sleeping partner
- Nominal partner
- Partner by estoppel
- Limited partner
- Secret partner
- Partner by holding out
- Partner in profit
Important clauses in a partnership deed:
A partnership deed may contain the following significant clauses:
- Firm’s name
- Business nature
- Aim of the business firm
- Partnership duration
- The date on which the patterns joined the firm
- Names and addresses of the patterns
- Amount of capital invested by the partners
- Amount withdrawn by the partners
- Acceptance of liabilities
- Profit-sharing ratio
- Admission and retirement procedure
- Salary amount paid to the partners
- Allocation of work among partners.
- Mode of valuation of goodwill.
- A procedure that will be followed in case of dissolution of the firm
To acquire a GST registration, the firm will need to submit PAN number, address proof, and identity & address proofs of the partner. Next, an authorized signatory will sign the application using a digital signature certificate or e-Aadhaar verification.
Current Bank Account:
For opening a current bank account, a firm will need to submit the following documents:
- Partnership deed
- Partnership firm PAN card
- Address Proof of the partnership firm
- Identity proofs of all the partners
- Partnership registration certificate
- GST certificate (or any registration certificate issued by the state or central government)
- Copy of electricity bill, telephone bill, or water bill (for 3 months)
- An authorization letter must be produced on the letterhead of the firm authorizing a partner as authorized signatory for the bank account.
If the registrar is satisfied with the documents, he will register the firm in the Register of Firms and issue a Certificate of Registration.
The following are the disadvantages faced because of registering a partnership deed.
- Co-operation is not satisfactory
- Limited capital amount
- Public confidence may be lacking
- Stability may be imbalanced
- Organizing sources are limited
- What is a Partnership Firm?
An organization of two or more persons managed by any one or all of them to lead a business and share the profits is called a partnership firm.
- What is the duration of registering a partnership?
In India, the partnership firm can take up to 12-14 days.
- Are there any reasons stating which partnership can be invalid?
The court may make a partnership invalid if the partnership agreement is not registered.
If the aim of the business is not proper, the court may consider the partnership invalid.
- Will a certificate be provided?
Yes, an acknowledgment will be given in Form-C
- Is notary compulsory for partnership deeds?
Yes, it is necessary to notaries a partnership deed.