Difference between registered partnership firm and Unregistered partnership firm
In the terms of the Act Indian Partnership Act 1932, the minimal and basic criteria to start your business is to execute the Partnership deed.
A partnership firm is a business entity that is controlled by an association of people. The sole purpose of forming a partnership firm is to make profits and the partners are entitled to share the liability of profit and loss of the company.
- PROVISIONS UNDER INDIAN PARTNERSHIP ACT, 1932
Registered partnership firm- It is registered under the provisions of the Indian Partnership Act, 1932 and all these provisions apply to them.
Non-registered partnership firm – The provisions of the Indian Partnership Act, 1932 do not apply to such firms as they are not registered under the provisions of the Indian Partnership Act, 1932.
- TRUSTWORTHINESS AND RELIABILITY
Registered partnership firm – There is Trustworthiness and reliability among each partner as the firm is registered.
Non-registered partnership firm – As these firms are not registered, trustworthiness and reliability cannot be maintained.
- POWER TO FILE CASES AGAINST THE THIRD PARTY
Registered partnership firm – It can file cases against third parties. The person suing the third party has to be a partner in the registered firm.
Non-registered partnership firm – It does not have the power to file cases against third parties.
- ABILITY TO CLAIM SET OFF
Registered partnership firm- If a third party files a case against a registered partnership firm; the firm can claim a set-off.
Non-registered partnership firm –The power to claim set-off is unavailable for firms that are not registered under theIndian Partnership Act, 1932.
- CONVERSION
Registered partnership firm- It can easily convert itself into an LLP or a private limited company.
Non-registered partnership firm – A non-registered firm first needs to register itself under the provision of the Indian Partnership Act, 1932 before converting itself into an LLP or private limited company.
- INCOME TAX BENEFITS
Registered partnership firm- Itcan claim tax benefits under the provision of Income Tax Act.
Non-registered partnership firm – Itcannot claim any tax benefits under the provision of the Income Tax Act as they are not a registered firm.
Conclusion
A registered partnership firm gets many more benefits than a non-registered firm. It is always advisable to get your partnership firm registered so that you can take advantage of an array of benefits and provisions laid under the Indian Partnership Act, 1932.
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