Business registration – Partnership

A partnership is a business arrangement which involves two or more people. A partnership isn’t a separate legal entity, so the liabilities in addition to the profits are shared by all the partners. The partners agree to do business through a partnership deed, this can be oral or written and can be registered as well. Registration is optional according to the partnership act and can be done at any time not only before starting the business. 

Benefits

• Ease of formation and closure: A partnership is formed and can be closed by an agreement, will need any other procedure.
• Balanced Decision Making: Since there are two or more partners there is sharing of responsibilities and balanced decision making.
• Risk Sharing: Unlike a sole proprietorship, there are two or more people in a partnership and all the partners share the risk, so it is not limited to one person.

Drawbacks

• Liability: Partners of the firm have unlimited liability, its shared amongst the partners in accordance to the partnership deed.
• Continuity: There is lack of continuity in a partnership as death, insolvency or retirement of a partner can bring end to the business and a fresh agreements will be required.

Documents Required

• Application of registration (Form 1)
• Affidavit/Statement
• Certified original copy of the  Partnership Deed
• Proof of principal place of business : ownership deeds or lease agreement or utility bill
• PAN/Aadhar of Partners

Types of Partnerships

1. Registered Partnership
2. Unregistered Partnership : A partnership deed is the only prerequisite for running a partnership firm, registration isn’t mandatory. But to go ahead with any legal claim registration is necessary and is thus recommended.

Procedure of Registration

• Partnership registration is provided for in Section 58 of the Indian Partnership Act.
• Form 1 and other required documents need to be filed with the registrar of firms of the area where the business is situated.
• If the registrar is satisfied with compliance he will grant registration certificate.
• All partners need to provide a statement that is signed by all partners which must include[1]:

(a) the firm-name,

(aa) the nature of business of the firm;

(b) the place or principal place of business of the firm,

(c) the names of any other places where the firm carries on business,

(d) the date when each partner joined the firm,

(e) the names in full and permanent addresses of the partners, and

(f) the duration of the firm.

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