Partnerships are agreements between two or more individuals or parties to work together for a common goal. Thus, a partnership firm is an organization whose members come together to conduct business according to agreed terms. In such firms, the terms and conditions are outlined in an agreement referred to as an original partnership deed.
Let’s start by discussing what types of businesses can register as partnerships before going into the details of how to register.
Are there any types of businesses that should register as a partnership firm?
One person usually manages the business needs of a small business as a sole proprietorship. Small businesses, however, often turn to partnerships when they grow and require more than one skill set, such as a salesman and manager.
The benefits of partnership firms include:
- Businesses owned and operated by siblings, husbands and wives, parents and children, or cousins
- A business that requires a specific set of skills, managerial talent, and expertise, such as a law firm, a construction company, etc.
- For businesses that want flexibility in their operations, they want to avoid several complex compliance requirements
- Furthermore, businesses with a medium capital requirement, such as small manufacturing units, wholesalers, and retailers.
Partnership Deeds: What are they?
Partnership deeds are agreements between the various parties involved in a partnership that define its terms and conditions. In a partnership deed, the following details are included:
- Business being conducted by the firm or to be conducted by it.
- The duration of the partnership, for example, a limited period of time, say 5-10 years, or a specific project.
- Names and addresses of the partners.
- The name of the partnership.
- The date on which the firm began operations.
- Each partner of the firm makes investments.
- Shared profits and losses among partners.
- Partner removal and intake rules and regulations.
- The partners’ responsibilities and obligations.
- Type of partnership.
The process of registering a partnership firm
It is not mandatory to partnership firm registration online, but it is advisable because you cannot bring a lawsuit related to it without registering. In order to register a partnership, you need to follow these steps:
- Fill out Form A and submit it to the Registrar of Firms along with the following documents.
- A copy of the partnership deed that has been duly signed or certified.
- Fees and duties required for stamps.
- With the registrar’s approval, the firm is added to the records and a certificate of incorporation is issued.
Chartered accountants or lawyers can assist you in registering your partnership firm. You can also register your partnership firm online.
Partnership Deed Benefits
- The purpose of a written and registered agreement is to serve as a formal agreement between two or more parties. Thus, a partnership deed is more effective than an oral agreement.
- Additionally, a partnership deed specifies the rules and regulations, as well as the profit sharing ratio to be followed by partners.
- By stating the details of each partner in the partnership deed, a partnership deed helps to avoid confusion among the partners.
- Disputes between partners can be resolved by referring to the partnership deed.
A Partnership Deed Format Checklist: What Are the Clauses?
- In a partnership deed, the name and address of the company are listed
- Details about the partners on a partnership deed
- Contribution of partners to capital
- A partnership deed specifies the accounting period
- Date of formation of the partnership
- According to the partnership deed of a firm, the rules of operations for bank accounts are as follows:
- Share of profits and losses
- Rates of interest on capital, loans, drawings, etc.
- Auditors are appointed according to the following rules
- Partners’ reimbursables
- Each partner’s rights, duties, and responsibilities
- When a company dissolves, there are rules and regulations that must be followed
- In the event of an admission, retirement, or death of a partner, rules & regulations must be followed.