The steps to draught a partnership deed and register a partnership firm will be covered in this article. Comparatively speaking to LLPs and Companies, partnership firms are relatively simple to set up.
Partners’ Company Name
- Picking a catchy name is the first step in starting a partnership firm. All names chosen by partners must adhere to the following guidelines:
- The name must not be too similar to or identical to that of an already-existing company engaged in the same industry. This is done to avoid confusion and safeguard the company’s excellent name and reputation.
- Emperor, crown, imperial, and other terms that suggest or reflect official sponsorship are not permitted in the name of the business. However, it is possible if the state government gives its written approval for the use of such phrases in the firm’s name.
- Putting Together a Partnership Deed
- The most important document when forming a partnership firm is the partnership deed. Each partner’s specific rights and obligations are outlined in this treaty.
- For tax reasons, a partnership agreement must be in writing, whereas a partnership deed may be either an oral or written arrangement. The following are the absolute necessities for a partnership deed:
- Names and addresses of the firm and all of the partners
- The type of business conducted and the date it first opened
- length of the relationship
- Each partner’s capital contribution and share allocation
- responsibilities, authority, and rights of each partner
Partners may also include other provisions in addition to the ones listed above. Some of the extra clauses that are typically included are:
wages and commissions due to partners
Interest on partner loan and capital investment
Setting up the audit
Rules to follow in the event of a partner’s death or retirement
Each partner shall have a copy of the partnership deed, which should be written by the partners on stamp paper in line with the Indian Stamp Act. If the partnership is being registered, a copy of the partnership deed must be filed with the firm’s registrar.
Why File a Partnership Form?
Although registering a partnership firm is not required, doing so is advantageous because only registered firms are granted the following rights:
- The ability to bring a lawsuit in any court to enforce any rights derived from a contract or the partnership act against the company or other partners.
- The firm is not permitted to enforce any contractual right in any court.
- In the event of a disagreement with a third party, neither the firm nor any of its partners may assert any setoffs or other processes.
Indian partnership firms are controlled by the Indian Partnership Act, 1932. A partnership firm may be registered either when it is first formed or later.
The registrar of the firm of the state where the firm is located must receive an application and the required fees in order to register a firm in India. Additionally, the following paperwork must be included with the application:
- Form No. 1 application for partnership registration
- Affidavit specimen properly completed
- Authenticated copy of the cooperation agreement
- ownership documentation for the primary business location. This might also be a rental or lease agreement.
All partners or agents who have been given permission to act on their behalf by the partners must sign the application. If the partnership deed satisfies the registrar, he or she will enter the statement in the Register of Firms and issue a Certificate of Registration.
All registered businesses are fully and currently listed in the register of firms kept at the office. Upon payment of the required fees, anyone may inspect this registry of firms. The applicant will receive a copy of all the information on the firm registered with the registrar upon payment of the appropriate price.
Registration with the registrar of firms differ from register with the income tax department, it should be noted. While registering with the registrar of firms is possible, registering with the income tax department is required. Moreover, having a pan card is mandatory for all enterprises.
With the reception of the PAN card, the company needs to create a current account with a bank of the partnership firm and conduct all of its business through this account.