While registering a partnership firm in India for startups, there are some basic things that need to be covered. Partnership and ownership is the two most popular forms of trade organizations in India. The reason why these two forms of organizations are so popular are that they are relatively easy to establish and the number of statutory compliance requirements to follow these forms of organizations is relatively less compared to the LLP and legal compliance requirements applicable to companies. As such, this article focuses on the registration process for the partnership firm.
Choose a partnership name. Partners are free to choose any name because they are subject to the following rules for their partnership firm:
1. The name should not be the same or similar to the name of any other existing firm doing the same business, so that confusion can be avoided. The reason for this rule is that a firm’s reputation or goodwill can be injured, if a new company can adopt an affiliate name.
2. The name should not contain words such as expressing or applying the sanction, approval or protection of Crown, Emperor, Empress, Empire or Government, except that when the State Government expresses its consent for the use of such words ( In writing) part of the name of the firm named.
Create a partnership deed. The document in which the rights and responsibilities related to the members of a partnership are written, is called partnership partnership. A partnership deed can be written in agreement or oral. However, in a verbal agreement, practically there is no value for tax purposes and therefore the partnership agreement should be written. The following are the essential features of a partnership deed:
All the partners along with the firm’s name and address
Will be on the nature of business
Business start date
Duration of partnership (whether for a certain period / project)
Capital contribution by each participant
Ratio of sharing share between partners
All the above are the necessary functions which are necessary in all partnership work.
Consider whether additional sections are required. Partners can refer to any additional section. Some examples of extra deed that can be mentioned in the partnership deed are given below:
Interest on the partner’s capital, the interest and interest of the partners, if any, is to be imposed on the picture.
Pay, commission etc., if any, payable to the partners
Account preparation and audit arrangements
The division of work and responsibility, that is, the duties, powers and obligations of all the partners.
Rules to be followed in case of retirement, death and admission of partner
Treat the Partnership Deed as appropriate. Deed made by the partners should be on a stamp paper according to the Indian Stamp Act. Each partner should have a copy of the partnership deed. If the firm is registering, then a copy of the partnership with the Registrar of Firms should also be filed.
Decide whether to register the partnership firm or not. Partnership in India is governed by the Indian Partnership Act, 1932. According to the Partnership Act, registration of partnership firms is optional and is entirely at the discretion of the partners. Partners can or can not register their partnership agreement. However, in a case where the partnership deed is not registered, the partner can not be able to enjoy the benefits that a registered partnership firm enjoys.
Registration firm’s registration can be done anytime before starting business or during the continuation of the partnership. However, where the firm intends to file a case in court to enforce the rights arising from the contract, the registration should be done before filing the case.
The process of registration of a partnership firm in India is quite simple. An application and fixed fee is required to be deposited with the registrar of the firm in which the firm is located. The following documents are also required to be submitted along with the application:
1. Application for Participation Registration in Form No. 1
2. Duplicate sample of affidavit
3. Certified True Copy of Partnership Deed
4. Ownership proof of the principal place of business or rental / lease agreement.
Sign the application. Applications or statements should be signed by all the partners, or their agents, in particular, authorized in this regard.
Expect the registration process to proceed formally. When the Registrar is satisfied with the points stated in the Partnership Deed, then he will enter the entry of the statement in the register, which is called the firm of register and issues certificate of registration. The Register of Firms held at the Registrar’s Office contains complete and up-to-date information about each registered firm.
This register of firms is open to inspection by any person on payment of fixed fee; The person interested to see the details of any firm can request the Registrar of the firms for the same, and a copy of all the details of the firm registered with the Registrar on payment of the prescribed fee will be given to the applicant.
Be registered for tax. It should be noted that registration with the Registrar of Firms is different from the registration of income tax department. It is mandatory for all the firms to apply for registration in the income tax department and having a PAN card. After receiving PAN card, the partnership firm needs to open a current account in the name of the partnership firm and operate all its operations through his bank account.