Understanding Partnership Company Registration
A partnership is a sort of corporate organisation that carries less risk and has superior legal stability. A partnership deed is used to help a group of individuals form a partnership firm. The aforementioned agreement specifies the business’ legal requirements as well as the partners’ share of profits. Because there are few compliances, these entities are simple to create. Partnership-based organisations in India are governed under the Indian Partnership Act, 1932.
Partners are those individuals who were actively engaged in the founding of a partnership firm.
What Are the Key Benefits of Partnership Business?
In India, partnership firms are among the most widely used company structures because they provide the following advantages:
Simple to Incorporate
In comparison to other business structures, a partnership business can be incorporated rather quickly and smoothly. Drafting a legal agreement called a partnership agreement is the first step in incorporating a partnership firm. Remember that the sole basic document necessary to incorporate a business partnership is the partnership’s deed.
Minimal Compliances
Compared to corporate arrangements like an LLP, a partnership firm has fewer compliance requirements to follow. The need to secure the DSC, also known as the Digital Signature Certificate, is lessened in partnership firms when there are no directors.
The partnership firm can be reconstituted using a partnership deed, which appears to be simpler than with other business arrangements. Also, these businesses only see a small amount of operational compliance. Such businesses can be dissolved without having to deal with a ton of regulations.
Quick Decision Making
Due to the lack of a complex management structure, partnership companies can act quickly. There is no need to select extra authorities to serve this function because most decisions are made by the serving partners.
Flexible Profit-to-Loss Ratio
As per agreed-upon terms, partners have the freedom to choose the profit and loss ratio. This ensures that there is no discrepancy or ambiguity among the acting partners and improves the stability of the companies.
The Value of Establishing a Partnership Business as a Corporation
Unregistered partnership companies are less legally stable and more likely to dissolve. But, registered businesses do not run the same risks and provide their service partners with more advantages.
A partner in a partnership firm has the legal authority to bring a lawsuit against an affiliate partner who has engaged in dishonest or illegal behaviour. It goes without saying that members of unregistered companies lack these rights, regardless of whether a third party is the source of the conflicts of interest.
Documents Required for Partnership registration in India
Partnership Deed- A partnership deed can be orally agreed or agreed in written. Usually, it is preferred and suggested by consultants to have a written partnership deed to avoid any future conflict. Partnership deed need to be created on a judicial stamp paper obtained online from the authorised vendor and need to be signed by the partners.
PAN Card of Firm- Form 49A has to be filed by authorised partner of the firm to apply for a PAN
Address proof of Firm- rent agreement and one utility bill (electricity bill, water bill, property tax bill, gas receipt etc.) in case of rented premise.
For Opening a Current Account- For opening a current account, a firm needs to submit the following documents:
- PAN card of firm
- Identity proofs of all the partners
- Partnership deed
- Address proof of firm
- Any registration document issued by central or state government (GST certificate or MSME certificate)*
- Copy of latest electricity bill, gas connection bill or water bill
- Authorisation letter on the letterhead of the firm authorising a partner as authorised signatory for the bank account.
* As per RBI guidelines, GST certificate is not mandatory)
