Partnership firms in India are governed by the Indian Partnership Act, 1932. While it is not compulsory to register your partnership firm as there are no penalties for non-registration, it is advisable since the following rights are denied to an unregistered firm:
1.A partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act
2.A right arising from a contract cannot be enforced in any Court by or on behalf of your firm against any third party
3.Further, the firm or any of its partners cannot claim a set off or other proceedings in a dispute with a third party.The Partnership Deed created by the partners should be on a stamp paper in accordance with the Indian Stamp Act and each partner should have a copy of the partnership deed. A Copy of the Partnership Deed should also be filed with the Registrar of Firms in case the firm is being registered.
Choosing the Partnership Name
The partners are free to choose any name as they desire for their partnership firm subject to the following rules:-
1. The names must not be too identical or similar to the name of another existing firm doing similar business so as to lead to confusion. The reason for this rule being that the reputation or goodwill of a firm may be injured, if a new firm could adopt an allied name.2. The name must not contain words like Crown, Emperor, Empress, Empire or words expressing or implying the sanction, approval or patronage of Govt except when the State Govt signifies its consent in writing to the use of such words as part of the firm nameThe following are the essential characteristics of a partnership deed:-
The partners may also mention any additional clause in the partnership deed are mentioned below:-
- Name and Address of the firm as well as all the partners
- Nature of business to be carried on
- Date of Commencement of business
- Duration of Partnership (whether for a fixed period/project)
- Capital contribution by each partner
- Profit sharing ratio among the partners
1. Interest on Partnerís Capital, Partnersí Loan, and Interest, if any, to be charged on drawings.
2. Salaries, Commissions etc, if any, payable to partners
3. Method of preparing accounts and arrangement for audit
4. Division of task and responsibility i.e. the duties, powers and obligations of all the partners.
5. Rules to be followed in case of retirement, death and admission of a partner
How to Register Partnership deed in India
Partnerships in India are governed by the Indian Partnership Act, 1932. Registration of Partnership Firm may be done before starting the business or anytime during the continuance of partnership.The following documents are required to be submitted along with the application:-1. Application for Registration of Partnership in Form No. 1
2. Duly filled specimen of Affidavit
3. Certified True Copy of the Partnership Deed
4. Ownership proof of the principal place of business or rental/lease agreement thereof.The application or statement must be signed by all the partners, or by their agents especially authorised in this behalf. When the registrar is satisfied with the points stated in the partnership deed, he shall record an entry of the statement in a register called the Register of Firms and issue a Certificate of Registration