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.
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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.
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.
Yes. A partnership firm can sue or be sued in its own name. The firm is treated separate from its partners. However the partners does 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.
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.
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.
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.