Partnership

 

How to register a Partnership firm in India?

Partnership firm registration is required when two or more parties sign a formal agreement to manage and operate a business and share both the profits and losses.

Registering a Partnership is the right choice for small enterprises as the formation is straightforward and there are minimal regulatory compliance.

The Partnership Act has been in existence in India since 1932, making partnerships one of the oldest types of business entities in India. A partnership firm can even be registered after it is formed. There are as such no penalties for non Registration of a Partnership firm. But unregistered Partnership firms are denied certain rights under section 69 of the Partnership Act that majorly deals with the effects of non Registration of Partnership firms.

RELATED GUIDES

• What are the different types of a Partnership firm?
• Why Register a Partnership Firm?
• How to open a Partnership Bank Account?
• Post-Incorporation Compliances of Partnership Firm.
• Is it necessary for Partnership firms to get GST Registration?
• How to file GST returns for your Partnership firm?
• Is LLP an alternative for a Partnership firm?
• How to get a Trademark Registered?

What documents are required to register a Partnership Firm In India?

The application for the Partnership registration form must include the prescribed documents like the Identity proof, address proof, a real copy of the Partnership deed entered into and the proof of the Principal place of business.

Any of the following documents can be submitted as identity proof and address proofs.

1. PAN card
2. Passport
3. Driver License
4. Aadhar Card
5. Voters ID

Proof of Business premise can be established by submitting the following documents:

1. Sale Deed in case if the Partner owns the place
2. Rental agreement copy if the office is on rental basis
3. Copy of the latest electricity bill or the tax bill receipt

How to register Partnership Firms in India?

R R Tax Solution can help you register a partnership firm in less than seven days.

• At first, an advisor from our team at R R Tax Solution will brief you about the process and provide you the list of necessary documents required for Registration
• The submission of the documents can be done online through our mobile application or through our website.
• Once the verification of the documents is done a Partnership Deed is drafted and sent to the partners for obtaining the signature
• It is to be noted that all partners must sign the documents on stamp paper, and a copy of the same should be uploaded on our platforms.
• Once the signed Partnership Deed is available, it is registered with the concerned Registrar of firms, and a certificate of Registration is provided to the Partner.
• Along with providing the Certificate of Registration of the Partnership firm, we also help you open a current bank account in the name of the Partnership firm.

Types of Partnership firm

Depending on the extent of the liability while Partnership firm registration, we can derive the different classes of partners.

Partnership Firms can be classified into two types registered and unregistered Partnership firms. The Indian Partnership Act states that the only criterion to commence the business as a Partnership firm is a finalization and the partnership deed's execution between the Partners.

Under this act, the Partnership firms don't need to be registered. As an outcome of this lot of partnership businesses exist as unregistered partnership firms.

There are no penalties for the non registration of the partnership firms. Also, a partnership firm can be registered even after formation. But the unregistered partnership firms have been denied certain rights in Section 69 of the Partnership Act, which deals majorly with the effects of the non-registration of the partnership firm.

Here are the reasons why an individual should opt for a registered partnership firm:

A registered firm partner cannot file suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.

No suit to enforce a right arising from an agreement can be instituted in any court by or on behalf of a firm against any third party unless the firm is registered under the Partnership Act.

An unregistered firm or any of its partners cannot claim set-off or other proceedings in a dispute with a third party.

Therefore, it is better to register a Partnership sooner or later.

What are the advantages of Partnership firm Registration?

Partnership firm registration has more advantages than disadvantages. Here, we have mentioned the advantagesof Registering a Partnership firm.

• 1

Easy to start

Partnership firms are more comfortable to set up, and the only requirement in most cases is a Partnershipdeed.

• 2

Decision making

In a Partnership firm, decision-making is faster as there is no concept such as passing the resolution.

The Partners of Partnership firms in India enjoy a range of powers as they can undertake any business on behalf of the Partner's consent.

• 3

Raising of Funds

A Partnership firm can quickly raise funds as compared to a Proprietorship firm.

Even the banks find Partnerships more favorable while sanctioning credit facilities in comparison to a Proprietorship firm.

• 4

Sense of Ownership

As every Partner is the owner, the partners have the liberty to manage and control the firm's activities. The tasks might be varied, but people in a Partnership firm are together for a common cause.

Ownership creates a higher sense of accountability and belonging, which helps in creating a diligent workforce.

 

 

Basis	Partnership	LLP
Cost	A partnership firm is registered through R R Tax Solution starting from Rs.5899	LLP can be registered online starting at just Rs.7899 through R R Tax Solution
Authority	A partnership firm is registered under Section 58 of the Indian Partnership Act.	LLPs in India are registered under the Ministry of Corporate Affairs, Central Government.
Limited Liability Protection	In a Partnership, the partners jointly venture to share the profits and losses.	In an LLP, the Partner is not responsible for any negligence or misconduct of another partner. LLPs also provides liability protection to the owners from the debts of the LLPs.
Number of Partners	Partnerships must have two minimum of two partners to be registered. If the number of partners reduces below mandatory two due to death or incapacitation, the firm will stand dissolved.	Similar is the case with the LLPs. At least two members are required to get registered. If the number of Partners reduces below 2, the Partner would still find a new partner without dissolving the LLP.

What is the difference between Partnership and LLP?

How to convert a Partnership firm into an LLP?

Registering Partnership firms do have certain drawbacks as compared to the newly introduced Limited Liability Partnerships. As the Partnership firms do not provide Limited Liability Protection for the Partners.

In the recent past, LLPs have become a prime choice for small and medium-sized business firms.

Let us take a look at the process of converting a Partnership firm into an LLP.

To commence the Partnership conversion into an LLP, Digital Signature Certificate and DPIN OR Director Identification Number (DIN) must first be obtained for all the Partners.

Following documents are required along with Form 17 :

1. Consent of Partners for conversion into an LLP
2. Incorporation Documents for LLP
3. NOC from Tax Authorities
4. Financial Statements of the Partnership firm
5. List of all creditors along with their consent
6. Any other document or information as requested by the authorities.

Once the mentioned documents are submitted to the Registrar after the verification, a certificate of Registration for LLP is issued.

The LLP must then inform the concerned Registrar of firms about converting a Partnership into an LLP within 15 days from the date of conversion through the prescribed forms.

What is the procedure to transfer the license and Registration?

The Licenses, approvals, permits, or registrations will not be directly transferred into an LLP. Also, suppose there are any properties registered under the Partnership firm before the conversion. In that case, the LLP must approach the concerned authorities and initiate the laid down procedure for the transfer of assets.

Hence, before converting a Partnership firm into an LLP, the Partner must clarify all the aspects.

After the conversion into an LLP, the Partnership stands dissolved, and the name of the Partnership firm is removed from the register of the Registrar of Firms. The Partnership firm is considered wholly transferred into an LLP, and the conversion does not affect any existing contracts, employments, agreement, etc.

The Partners will now enjoy Limited Liability Protection for all transactions conducted after the conversion of Partnership into an LLP. The Partners will continue to be personally liable for all the business operated as a Partnership before conversion.

Post conversion into an LLP, the newly formed LLP must include a statement that it was converted from a Partnership into an LLP in all official correspondence for not less than 12 months from the date of conversion.

To convert a Partnership firm into an LLP, visit the R R Tax Solution website.

R R Tax Solution has helped over thousands of entrepreneurs to choose the correct type of business entity. Our services have helped entrepreneurs grow their businesses at an affordable cost.

We aim to help the entrepreneur with the legal and regulatory requirements and guide the individual throughout the business life cycle, offering support and guidance at every stage.

Our business consultants will help you choose the right kind of entity and guide you with the maintenance of the post-incorporation Compliance.