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A partnership is a special type of contract and is a relation between two or more persons who have agreed to share profits of a business run by all or any one of them acting for all. The essence of a partnership is a contract between partners. It is mandatory for partners to share profits among themselves.
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A partnership is one of the oldest business structures in India and is governed by the Indian Partnership Act, 1932. A partnership firm does not have an independent status apart from the partners constituting it. A partnership is not a legal entity; it has a limited identity for the purpose of tax laws. Any two people who are capable of entering into a contract can start a partnership business under an agreement called a partnership deed. The partnership agreement can be oral or written. It is not mandatory to register a partnership deed, but it is advisable to do so for evidential purposes since a firm cannot file a suit against a third party if it is unregistered.
Forming a partnership firm is simple since it does not have to be registered to start operations. A partner is an agent of the firm and all other partners. Each partner is liable for the actions of the other partners.
Name SelectionChoose an appropriate name for the partnership The first step is to choose an appropriate name for the proposed firm. While choosing the name, due care has to be taken to see that it does not violate the trademark of any other person or prohibited emblems and names.
Place of BusinessPlace of business: It is important that the firm should have a proper address since all official communications will be sent only to this address. The jurisdiction of the registrar will be ascertained by this address.
Partnership DeedExecute the partnership deed and stamp with appropriate stamp duty : By the partnership deed, the right, duties and liabilities of the partners is ascertained. All the partners to the firm are governed by the terms and conditions mentioned in the agreement. The stamp duty will vary from state to state and is based on the total amount of contribution by all partners.
Application for registrationAlong with the documents mentioned above, an application in the prescribed format needs to be submitted to the Registrar of Firms located in the jurisdiction mentioned in the official communication address. On receipt of the application, the Registrar will verify all documents. If satisfied that the provision of the Partnership Act is complied with, the Registrar will enter the particulars in the Register of Firms and issue an acknowledgment in the prescribed format.
Simple to Form and Easy to Operate
A Partnership is very simple to form and easy to manage condisering the regultory requiremets of Limited Company or Limited Liability Partnership.
Registration is not Mandatory
Registration of Partnership under the Partnership Act is not Mandatory. It is optional to the partners of the Firm. However, an unregistered partnership may face difficulties in getting the agreement terms enforced under law.
Simple Compliance Needs
Regulatory compliance requirements of partnership are much simpler compared to Limited Companies and LLP. However, the compliances related to Taxation and other operational matters are equally applicable to Partnership.
Basic document for registering a partnership firm is the executed partnership deed.
Partnership Deed Signed by all Partners
Primary ID - Permanent Account Number (PAN)
Additional ID - Aadhaar Card
Latest Address Proof: Telephone Bill or
Electricity Bill or
Bank Statement or Bank Passbook with latest entries
How it works
Place an Order at CompaniesInn
Complete the E-Lawyering Interview
Generate the Partnership Agreement and Execute it
Get the Agreement Registered with 'Registrar of Firms'
An Individual who is an Indian National and has completed 18 years of age and a Company or LLP Registered in India can become a partner of a partnership firm.
2 Persons (Individual or Company/LLP) are required to make a Partnership.
A Partnership is made by executing an agreement between the Partners.
Yes. A Partnership it self is created by the agreement between the partners. So, there is no partnership without an agreement.
No. Registration is not mandatory for a Partnership. But for better acceptance under various authorities including Bank, the Partnership deed is required to be registered under respective State Partnership Act.
Registration of Partnership is to be done under State Partnership Act and Rules and is done by the Registrar of Firms in respective State.
Liability of Partners in a Partnership Firm is unlimited. The personal assets of partners are also legally exposed to meet the business liabilities.
Yes. Registration of Partnership is not a pre-condition for opening a Bank Account.
Yes. Partnership must apply for separate Permanent Account Number (PAN) under Income Tax Law.