Partnership Firm Registration: The process explained
A company is established after the successful completion of different steps involved in the company establishment/incorporation process. The Government mentions guidelines, laws to follow and rules and regulations that individuals follow before incorporating their businesses. In this article, we will talk about one of the most common types of companies, Partnership firms and Partnership Firm Registration. Understanding the process of formation of a partnership firm is important.
What are the different types of companies?
The first decision an individual or a group of individuals take is to select the types of company. We will talk about different types of companies in this section:
- Sole Proprietorship
- Partnership Firm
- Corporation or Company
- One person company
- Section 8 Company
- Company Limited by Guarantee
- Public Limited Company
What are the types of Partnership Firms?
A partnership firm or company is further divided into many categories, the selection of which is undertaken on the basis of many factors. Only after deciding on the type, the individuals can move on the Partnership Firm Registration.
- General Partnership
- Limited Partnership
- Limited Liability Partnership
- Public Private Partnership
Who are the different types of Partners in a Partnership firm?
It is important to understand the different types of partners that a part of partnership firms.
- Minor partner
- Working partner
- Sleeping partner
- Limited Partner
- Partner by holding out
- Sub-Partner
What are the features of Partnership Firm?
Partnership Firm Registration is a crucial process, thus understanding the characteristics of a company is important before applying for its registration.
Some features of a Partnership Firm are as follows:
- Mutual contribution
- Division of Profits or Losses
- Co-ownership of contributed assets
- Mutual agency
- Limited life
- Unlimited liability
- Partners’ Equity Accounts
- Fewer Compliances to follow
- Minimum legal compliances
What are the benefits of Partnership Firm?
A partnership firm has several advantages in comparison to other types of companies, which will be talked about in this section.
Simple form of business structure
The business structure of the partnership company is simpler as compared to the structure off other companies as there are only 2 individuals required as partners.
Easy process of decision making
As there are rules and regulations involved in a partnership firm, the decision making process is easier.
Ease of raising funds
It is easier to get loans and advances for a partnership firm as compared to other firms such as large corporations.
Easy management
The managing of the business activities is easier in a partnership firm as all the duties and responsibilities are assigned to the partners.
What is the process of Partnership Firm Registration?
The registration process of partnership firms involves steps that are necessary for the individuals to follow in order to receive partnership firm registration and start business activities.
Selection of an appropriate name
The first step in the Partnership Firm Registration process is the selection of the name of the company. Certain guidelines are mentioned with regards to name selection which must be followed by the applicants. The name of the company must not include emperor, empress, crown, empire etc.
File an application
In this step, the partners must file an application for Partnership Firm Registration in Form 1 and mention all details of the form. Once the application form is filled, it must be submitted to the Registrar along with the fees.
Preparation of Partnership Deed
The next step is to prepare a partnership deed for the partnership firm. In the deed, the partners must specify all details with regards to the business, agreement made by the partners, profit-loss sharing ratio and other important details.
Submission of documents
All the documents must be prepared and submitted to the Registrar along with the form and fees before the prescribed duration. The details mentioned in the documents submitted must be true as verification of the documents will be conducted. The partnership deed must also be submitted along with all the documents.
The concerned authority for registration conducts a verification process that is conducted for a maximum of 3 -5 days.
Issuance of Registration Certificate
After the form and all the documents are considered satisfactory, they will be approved by the authority and the registration certificate will be issued to the partners.
What documents are required for Partnership Firm Registration?
The documents are a mandatory requirement for individuals and they need to submit all the documents in the manner that is required by the authority.
Partnership deed
A partnership deed is a document that contains all the details with regards to the partnership firm. Before preparing a final partnership deed, the partners must prepare a draft so that the errors can be minimized when the final draft is prepared.
PAN Card
A PAN card serves an identity proof of the individual and thus PAN cards must be submitted to the authority.
Address Proof
A copy of the address proof is a mandatory requirement for the partners to present it to the authority. Documents such as ration card, voter ID, driving license etc. can be submitted as an address proof.
Office Address proof
The place where the partnership firm will be operating its business activities must also be submitted to the authority.
What is a Partnership Deed and why is it important for Partnership Firm Registration?
A partnership deed is a crucial aspect of the partnership firm and a significant document to be submitted in the Partnership Firm Registration. As all the details are mentioned in the deed, it is easy to understand several aspects of the company.
Components in a partnership deed are as follows –
- Details of the partner and firm such as names, addresses, qualifications etc
- Nature of the firm and business activities that will be undertaken
- Shares of all the partners in the partnership firm
- Profit/loss sharing ratio among all the partners
- Details of loans provided by partners
Conclusion
Partnership Firm Registration must be undertaken by following the process in a manner which is predefined by the authority. A Partnership firm has many benefits which is the reason why it is considered by many individuals and the reason why it is one of the most common types of companies.
This Article has been contributed by Mahiya Ahmed. She is working for SwaritAdvisors. SwaritAdvisors is a legal & financial services provider with free expert’s help such as- Private Limited Company Registration, Section 8 Company Registration, NBFC Registration, Nidhi Company Registration, Sole Proprietorship Registration, Patent Registration, NGO Registration, etc.
