Partnership Registration

A partnership is a very common form of business organisation. Especially in India, partnership firms are generally finding favour when the business is medium scale. So it is important that we learn about the Partnership deed and the registration of such deeds.

How to register a Partnership firm in India?

Partnership firm registration is required when two or more parties sign a formal agreement to manage and operate a business and share both the profits and losses.

Registering a Partnership is the right choice for small enterprises as the formation is straightforward and there are minimal regulatory compliances. The Partnership Act has been in existence in India since 1932, making partnerships one of the oldest types of business entities in India. A partnership firm can even be registered after it is formed. There are as such no penalties for non Registration of a Partnership firm. But unregistered Partnership firms are denied certain rights under section 69 of the Partnership Act that majorly deals with the effects of non Registration of Partnership firms.

Types of Partnership firm

Depending on the extent of the liability while Partnership firm registration, we can derive the different classes of partners.

Partnership Firms can be classified into two types registered and unregistered Partnership firms. The Indian Partnership Act states that the only criterion to commence the business as a Partnership firm is a finalization and the partnership deed’s execution between the Partners.

Under this act, the Partnership firms don’t need to be registered. As an outcome of this lot of partnership businesses exist as unregistered partnership firms.

There are no penalties for the nonregistration of the partnership firms. Also, a partnership firm can be registered even after formation. But the unregistered partnership firms have been denied certain rights in Section 69 of the Partnership Act, which deals majorly with the effects of the non-registration of the partnership firm.

Here are the reasons why an individual should opt for a registered partnership firm:

• A registered firm partner cannot file suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.
• No suit to enforce a right arising from an agreement can be instituted in any court by or on behalf of a firm against any third party unless the firm is registered under the Partnership Act.
• An unregistered firm or any of its partners cannot claim set-off or other proceedings in a dispute with a third party.

Therefore, it is better to register a Partnership sooner or later.

What documents are required to register a Partnership Firm In India?

The application for the Partnership registration form must include the prescribed documents like the Identity proof, address proof, a real copy of the Partnership deed entered into and the proof of the Principal place of business.

Any of the following documents can be submitted as identity proof and address proofs.

• PAN card
• Passport
• Driver License
• Aadhar Card
• Voters ID

Proof of Business premise can be established by submitting the following documents:

• Sale Deed in case if the Partner owns the place
• Rental agreement copy if the office is on rental basis
• Copy of the latest electricity bill or the tax bill receipt

What are the advantages of Partnership firm Registration?

Partnership firm registration has more advantages than disadvantages. Here, we have mentioned the advantages of Registering a Partnership firm.

• Easy to start
  • Partnership firms are more comfortable to set up, and the only requirement in most cases is a Partnership deed.
• Decision making
  • In a Partnership firm, decision-making is faster as there is no concept such as passing the resolution.The Partners of Partnership firms in India enjoy a range of powers as they can undertake any business on behalf of the Partner’s consent.
• Raising of Funds
  • A Partnership firm can quickly raise funds as compared to a Proprietorship firm.Even the banks find Partnerships more favorable while sanctioning credit facilities in comparison to a Proprietorship firm.
• Sense of Ownership
  • As every Partner is the owner, the partners have the liberty to manage and control the firm’s activities. The tasks might be varied, but people in a Partnership firm are together for a common cause.Ownership creates a higher sense of accountability and belongingness, which helps in creating a diligent workforce.
• FSSAI registration
  • FSSAI registration must be obtained from the Food and Safety and Standard Authority of India in the operator’s name if the Proprietorship is involved in the selling or handling of food products.