Partnership Firm Registration

A partnership is a relationship that sustains between those individuals who have agreed to invest their assets, labor and share profits among them. A partnership firm is not a legal entity, it consist only those peoples who create the firm. The business of the firm can be done for all or any of them. Any partner has the right to bind the firm. The work of one partner is binding on all partners. Thus each partner is the ‘agent “of all the remaining partners, so partners are “mutual agents”. A general partnership should have a minimum of 2 participants. There can be a maximum of 10 participants in the partnership in banking business, whereas participation in any other business can have a maximum of 20 participants.

 On the assets of a partnership firm the partners have a jointly ownership. Partners can register the partnership firm as per their wish, because the registration of a partnership firm is not compulsory as per the Partnership Act 1932.It cannot sue any third party. In this way, when more than 2 or 2 people do agreement for come together to operate the business and divide their profit and loss themselves, So they are called jointly of the firm individually and collectively as partnership firms, and the firm is known by the name given by its partners.

 Advantages of Partnership Firm

1. Easy Formation

A partnership firm is easier to build because it costs less to build. Its registration is not mandatory. It can be formed without any legal formalities and expenses.

2. Larger Resource

A partnership firm consists together of a greater number of partners than a sole proprietorship. All partners jointly contribute so that large resources can be obtained for professional operations.

3. Flexibility in Operating

The number of partners in a partnership firm is limited, with which leads to flexibility in business operations. Partners can change to meet any objective by mutual consent.

4. Better Management

All partners participate in the management and operation of the partnership firm which with all partners can work together and conduct business better and can increase the profits in their business.

5. Sharing of Risk

Each partner has a personal risk in a partnership firm because if any loss in business then it is distributed equally across all partners. It carries less risk than sole proprietorship.

6. No Registration Required

According to partnership act 1932 registration is not compulsory for partnership firm. Participant can register it as per their wish.

 7.  Sharing of Profit

The main objective of the partnership firm is to earn profit and distribute its dividend among all the partners on the basis of mutual agreement.

Documents required for the Registration of a Partnership firm

• Copy of Aadhar card of partners.
• Copy of PAN card of partners.
• Sole deed in case one of the partners owns the place of business.
• Rental agreement copy if the premises are rented.
• Copy of latest electricity bill or water bill or property tax receipt.
• Original copy of partnership deed signed by all partners.

Contract for partnership firm

A partnership is a contractual process. A partnership is an agreement between two or more persons. It does not arise from the operation of law. Neither can it be inherited .it has to be a voluntary agreement between partners.

Association of Two OR More Persons

A partnership involves two or more people and individuals are selected by legal process.The law prohibits minors from being partners, but minors can become partners of profit Number of participants is not described in the Act. But this has been covered under the company ACT 2013.So a partnership can only have a maximum of 10 partners in a banking firm and 20 partners in all other kinds of firm.

Carrying on of business

Partners should do a business that can make a profit because the main object of the business is to earn profit, which is divided between the other partners. Partners should not participate if they do not want to make profit.

Profit Sharing

Sharing of profit is one of the essential element of a partnership .It is not important how the benefits are shared among themselves.But a partner cannot be entitled to the entire profit of the firm It is necessary to divide the profit among all the partners .There is no significant element of loss allocation. It is up to the partners whether the losses will be shared by all the partners or not.

Mutual Agency

In partnership firm, other partners are also binding on the work done by the partners. And so every partner is bound by the acts of all the other partners. Every partner is both a principle as well as an agent for all the other partners of the firm. This is one of the most important aspects of a partnership. It is, in fact, the truest test of a partnership.

Procedure for Partnership firm Registration

1. Step: – Application for the registration
2. Step: – Submitting all the above mentioned documents to the registrar of state firms.
3. Step: -The certificate is issued by the registration and its copy should be given to all the partners.
4. Step: – Naming the partnership firm.
5. Step: – Open a bank account.

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