Partnership
This form of business entity owes its feature as an old business structure in India and is governed by the Indian Partnership Act, 1932. Any two individuals, who wish to enter a contract to initiate a business, can do so in accordance with the agreement called a partnership deed .A partnership isn’t a legal entity, and is thereby not mandatory to register a partnership deed. This kind of business structure is usually opted by small businesses .It always advisable to register a partnership, so as to avail legal protection or measures in situations of crisis that may arise in the business .The partners share all the liabilities and profit in confirmation to a set ratio decided in prior.
Steps of Registration process
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Name Selection
It is very important to select an appropriate name for the partnership .Due diligence must be made in order not to formulate similar names or existing trademarks.
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Place of Business
The address, which states the place of business, must be clear and relevant. All official communications pertaining to the partnership shall be intimated to the given address.
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Partnership Deed
This document is the crucial element of the process .It determines the rights and responsibilities of the partners .The document shall be executed on a stamp duty .The stamp duty is determined on the total amount of contribution made by all the partners .It shall vary from state to state as well.
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Document Submission
An application form with all the documents are then submitted to the Registrar of Firms of the State in which the place of business is recorded
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Certificate of Registration
Once the aforesaid are received ,the registrar shall verify the documents and if found compliant and satisfactory ,the firm will be registered .Consequently ,a certificate of Registration is issued .
Documents Required for Registration
- Primary ID Proofs –PAN Card
- Aadhar Card
- Utility bills/Bank Statements – All must be with latest entries
- Partnership Deed signed by the partners
- Proofs of business address
Benefits of Partnership
- Easy to form and operate
It is the easiest form of business structure that can be formulated .The main requirement would be a Partnership Deed .In comparison to LLP ,the regulatory requirements are way simple .
- Minimal Compliance
The regulatory compliance requirements are simpler .For Eg : an auditor isn’t required ,annual accounts filing with the registrar isn’t necessary as well.
- Registration isn’t mandatory
Its optional to register a partnership .This gives room for simple start ups and home businesses to explore their business possibilities at the initial stage .
