Registration of Partnership Firm
A Partnership is a business structure in which two or more individuals manage and operate a business in accordance with the terms and goals set out in the PartnershipDeed.
A partnership is easy to form as no cumbersome legal formalities are involved. Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain legal benefits. The Registrar of Firms is responsible for registering partnership firms.
A partnership is formed by an agreement which may be either written or oral. When the written agreement is duly stamped and registered, it is known as "Partnership Deed".
Ordinarily, the rights, duties and liabilities of partners are laid down in the deed. But in the case where the deed does not specify the rights and obligations, the provisions of the THE INDIAN PARTNERSHIP ACT, 1932 will apply.
Choose Partnership because
- Partnership registration is very easy.
- Partnership registration is inexpensive as compared to LLP.
- It has minimum compliance requirement.
Need for Partnership Registeration?
If you don’t register your Partnership:
1. Partner Cannot sue firm: A partner in an unregistered partnership firm cannot sue the firm for enforcing any rights under the Indian Partnership Act, 1932.
2. Cannot claim Setoff in a dispute with a third party.
3.The firm cannot sue third parties whereas the third parties would be able to sue the firm irrespective of registration.
In India, Partnership firms are of 3 Types:
|Unregistered Partnership Deed
||Partnership Registered with Magistrate
||Limited Liability Partnership
- Low cost of Formation and compliances and less statutory compliances as compared to Private limited Companies
- Better decision making and control over the business.
- A partnership usually has limitations that keep it from becoming a large business.
- Unlimited liability. General partners are liable without limit for all debts contracted and errors made by the partnership.
- Since decisions are collective ,disagreements can occur.
Tax Benefits of Forming a General Partnership
General partnerships do not pay income tax. However, the owners or partners of a general partnership do. As with sole proprietorships and limited liability companies, partnerships are pass-through tax entities. This means the profits and losses of a partnership trickle down to the business' owners, who must declare their share of the business' income on their personal tax returns. Partnerships do not have to calculate or pay estimated taxes.
Taxation of partnership
Tax will be payable at a flat rate of 30% plus 3% Education cess & Secondary and Higher Education cess on the total of income tax.
Particulars of the Deed
- The Name of the firm.
- The Nature of the business to be carried out.
- The Names of the partners with their Address.
- The place or principal place of business of the firm
- The names of any other places where the firm carries on business
- The amount of capital to be contributed by each partner.
- The Loans and advances by partners and the interest payable on them.
- The amount of drawings by each partner and the rate of interest allowed thereon.
- The Duties and powers of each partner.
- The duration of the firm
- Any other terms and conditions as required by partners to run the firm.