A Partnership firm gets registered under section 58 of the Indian Partnership Act 1932 and it is done through the Registrar of Firms.
A business entity that is controlled by an association of people is defined as a partnership firm. The partners of a partnership firm share the liability of profit and loss.
Steps to register a Partnership firm
- Selecting a suitable name for the firm
Choosing an appropriate name is one such step that needs to be initiated while registering a partnership firm.
- The name must not be too identical or similar to the name of any existing company wherein it can lead to confusion.
- However, the name should not be from any of the existing popular brands or any other trademarks. It should be limited to the name of the owner or accomplices.
- The name must not contain words in the name that signifies its consent in writing to the use of such words of the firm name that indicates sanction or approval by the government.
- Drafting of the partnership deed
A partnership deed contains details about the partners of the firm and a few details of the firm. Few points that need to be kept in mind while drafting a partnership deed include:
- Nature of business
- Date of commencement of business
- Principal place of business .
- Contribution of capital from Partners
- Name and details of partners
- Rights and duties of each partner
- The ratio of profits shared
- Finalisation of the partnership deed.
Once the deed has been finalised, to consider it to be legal it needs to be printed out on a stamp paper with proper notary and also affixing the signature of each partner.
- The value of Stamp duty payable will differ from state to state.
- Application for registration
The application for registration needs to be completed including all the necessary details of the firm, partners, contribution towards the firm, location and duration of the firm and the date of commencement of the business. This needs to be signed and notarised by each partner.
- Submission of the application
The application needs to be submitted to the registrar of Firms along with the documents required for the registration process as listed below:
- Application for registration of Partnership (Form 1)
- Specimen of Affidavit
- Original copy of Partnership deed
- Ownership proof of the principal place of business.
- Stamp duty fee
On completion of the final submission, stamp duty fees pertaining to the particular state needs to be paid for the partnership registration.
- Registration Certificate
The verification of the application will be done by the Registrar and the registration Certificate will be issued.
- PAN application
It is always advisable to get a PAN in the name of the partnership firm even if the firm is not registered. PAN would be required to open a current account in the name of the Partnership Firm and is useful from the perspective of taxation.
A partnership firm is formed with the sole purpose of earning profits by sharing both profit and loss with the partners of the firm.
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