Simple & Easy to start, a partnership firm can be started by minimum two and maximum 20 partners coming together in one common name. The partners relationship is of mutual agents to each other and they carry unlimited liability towards business risk. The Partnership Business Can be Started by setindiabiz assistance at Just Rs. Rs. 5000/-.
Partnership Registration Online
To start a
Partnership Registration Procedure, partners need to enter into an agreement which is popularly known as Partnership Deed. Different states impose stamp duty on the partnership deeds, it means while creating a partnership instrument (Deed) the partners must purchase stamp paper of appropriate value to be annexed with the agreement. An agreement can further be notarised. To bring more stable document which is admissible under law without any doubt the same can be registered as document by filing the same before the registrar of documents, such a notary or registration does not amount to registration of firm as such. Though registration of partnership Firm has not been mandatory under The Partnership Act, 1932, however section 69 of the act specifies effect of Non Registration, which means an unregistered firm shall not be able to recover any sum more than Rs. 100. Thus it is strongly recommended to the partners to get the firm registered. The registration of Firm can be obtained by filing the deed and Know Your Customer (KYC) Documents of the partners and KYC of premises where the address of firm shall be situated.
Partnership Registration Procedure
Selection of Name
A Partnership firm need to be started with a separate name by declaring the same in the agreement to be the name of the firm. However care should be taken while deciding the name of the firm to avoid any conflict with someone else trademark. We advises that the name of firm should be cross checked with the trademark registry to avoid any infringement or passing off the others Trademark or brand name.
TAN Number Allotment
A liability is created to deduct the tax while making payments in the course of business. The TDS rates are specified separately which ranges between 1-20% depending upon the transaction. The TDS so deducted is deposited with the Income Tax Department and details are filed through the quarterly return of TDS. To comply with the provisions of TDS a TAN number is needed which a unique number is allotted by the Income Tax Department.
Partnership Deed Drafting
The Partnership Agreement is the constitution of the firm which determines the relationship of partners among themselves as well as the relation of partners vis a vis firm. The agreement also lays down the methods of admitting a new partner or for removal of partner. The capital, Interest on Capital, Partners Salary, and profit sharing ratio are some of the predominant items in the agreement which need to be carefully drafted.
Partnership Deed Notarisation
A Partnership Deed must be well drafted and the signature of the partners be made on the agreement in presence of witnesses before a Notary Public. This brings certainty and establishes that the agreement of partnership is made with free consent of the parties and in presence of witnesses so that no one backs out later on that he is not the party of the agreement.
Partnership Firm Registration
Though the partnership act 1932, does not make the registration of firm mandatory, However in view of limitations imposed by section 59 of the act. It is strongly recommended to get the firm registered by filing the application before the registrar of the firm. In the application KYC of the partners, copy of deed, KYC of the premises where the firm is situated is filed.
PAN Card of the Firm
PAN is the abbreviated form of Permanent Account Number, which is a ten digit alphanumeric number allotted to the assesses of the income tax by the Income tax office ( ITO). It is a unique number which identifies the firm before the IT Department. Form No 49A need to be filed along with the copy of partnership deed to get the PAN Card. It takes around a week time
Common Questions On Proprietorship Formation Online
Should a partnership firm be registered
There is no provision under the partnership Act, 1932 which mandate the registration of partnership. However the act itself provides for procedure of registration of firm. Thus the registration is optional but highly recommended, as an unregistered firm shall not be able to recover any money in excess of INR 100/- . Apart from the above legal impediment, from the practical point of view also the firm should get registered in order to bring certainty in the relationship of partners and the firm per se.
Is a written partnership deed necessary to form a partnership firm?
No, it is not necessary. As the contract act does not makes it necessary to have the agreement in writing. However it is always prudent to make a partnership deed to produce to the bank, income tax authorities and to clients with whom the partnership firm deals with. Apart from serving as a reference document a written partnership deed also helps in reducing conflict and confusion in due course of time.
Can a partnership firm be sued in the name of the firm?
Yes. A partnership firm can sue or be sued in it’s own name. The firm is treated separate from its partners. However the partners do not enjoy limited liability as available in case of LLP or a company. In a situation where the firm is not in a position to discharge its liabilities the partners shall be called in to pay the liabilities of the firm.
Can a partnership be constituted for a particular business undertaking?
Yes. A person may become a partner with another for a single adventure or undertaking. The term of partnership firm can be for a specific period or for the completion of a specific project or at will. The deed must have a specific mention about the tenure of the partnership agreement. Even partnership which is created for a specific purpose can be closed before the term with the consent of all the partners.
Am I personally liable for my business under a sole proprietorship?
Yes. Unlike other incorporated business forms, you are personally liable for any of your sole proprietorship's debts or legal judgments against your business. This means that in order to satisfy debts owed by your business, debt collectors can come after your personal assets, homes, cars, etc. For this reason alone, you should be extremely cautious about setting up a sole proprietorship. Setindiabiz.com recommends One Person Company in place of proprietorship.
Can one deal with one of the partners of a partnership firm?
Yes. The law presumes that each partner is an agent of the other and while dealing with third parties the partner is representing the partnership firm in good faith. The acts done by one partner is binding on another even if it is not in the knowledge of the other party.
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