The Indian Partnership Act, 1932 deals with the process related to the partnership firm. Section 4 of the Act deals with the definition of partnership as “partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. A partnership must contain an association of two or more persons, an agreement between them, a business mindset, a nature of sharing profits, and a mutual agency.
Registration Process of Partnership Firm
Partnership Firm is nothing but when a number of individuals who have entered into a partnership with one another are called individually ‘partners’ and collectively a ‘firm’. The registration of a firm may take place at any time just by filling an application in the form of a statement and giving the necessary information, with the Registrar of Firms of the area.
Firstly, you have to select a name for the partnership firm.
Draft a partnership deed – This will contain all the rules, regulations, and duties that should be fulfilled by the partners. The deed will also contain the full and proper name with the address of the firm. Full and proper name and address of each of the partners of the firm. Nature or principals of the business. The partners will share the ration of profit. Duration of the partnership. The capital contribution of each partner. Salaries, commission, and other remuneration if any must be included.
For legalizing the partnership deed, one should note on a stamp paper and all the partners will sign on it. All partners will sign in front of a notary (as a witness), further, he will sign it as valid. The value of the stamp paper depends upon the overall valuation of the partnership firm and the location of the firm.
Every partner must ensure that they will have a copy of the partnership deed as proof of partnership and the original one can be kept as the business record.
Having a pan card in the name of the firm – It is necessary for a firm to have a pan card in name of the firm so that the government is able to look upon the account related matters properly.
Submit the registration application to the Registrar of companies to complete the registration process of the firm. Attach the essential, documents with the registration application.
A certified copy of the partnership deed (original)
The pan card of the firm with a pan card of all the partners.
Proper address proof of the partnership firm with the partners.
An affidavit certifying all necessary details in the application are correct.
Make the payment of all fees and stamp duties to the Registrar, as per the requirement. Registration will not be completed until and unless you pay the dues.
Once the Registrar is complete with his reviewing, within a span of few weeks they will issue the Registration Certificate to you.
The partnership firm is ready to work on.
However, registration of a partnership firm is not required legally, but according to Section 69 of the Indian Partnership Act 1932, specifies the effect of ‘Non-Registration’, that an unregistered firm shall not be able to recover any sum more than 100 rupees. So, it is recommended to register the partnership firm with the registrar of firms.
Consequences of Non-Registration of a Firm
It is optional for a partnership firm to get registered. In case a firm does not get registered, it is deprived of many benefits.
The consequences of non-registration of a firm are as follows:
(a) A partner of an unregistered firm cannot file a suit against the firm or other partners,
(b) The firm cannot file a suit against third parties, and
(c) The firm cannot file a case against the partners.