Partnership firms are relatively easy to start are is prevalent amongst small and medium sized businesses in the unorganized sectors. The document in which the respective rights and obligations of the members of a partnership is written called Partnership Deed.
A Partnership Firm is a popular form of business constitution for businesses that are owned, managed and controlled by an Association of People for profit. Partnership firms are relatively easy to start are is prevalent amongst small and medium sized businesses in the unorganized sectors. With the introduction of Limited Liability Partnerships in India, Partnership Firms are fast losing their prevalence due to the added advantages offered by a Limited Liability Partnership. There are two types of Partnership firms, registered and un-registered Partnership firm. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm due to the added advantages. Partnership firms are created by drafting a Partnership deed amongst the Partners and Sudnya Startup Mantra can help start a registered or un-registered Partnership firm in India.
Any name can be given to a partnership firm as long as you fulfill the below-mentioned conditions:
Partnership deed is an agreement between the partners in which rights, duties, profits shares and other obligations of each partner is mentioned.
Partnership deed can be written or oral, although it is always advisable to write a partnership deed to avoid any conflicts in the future.
Following details are required in a partnership deed:
Apart from these, certain specific clauses may also be mentioned to avoid any conflict at a later stage:
Indian Partnership Act, 1932 governs the partnerships. Registration of partnership firm is optional and at the discretion of the partners.
Registration of partnership firm may be done at any time – before starting a business or anytime during the continuation of partnership.
It is always advisable to register the firm since a registered firms enjoy special rights which aren’t available to the unregistered firms.
An application form along with fees is to be submitted to Registrar of Firms of the State in which firm is situated. The application has to be signed by all partners or their agents.
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. 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.
Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.
Three elements are necessary to form a partnership: