In India, partnership firms are governed by the Partnership Act of 1932, which refers to two or more people working together to accomplish a task. As per the Indian Partnership Act, a partnership is a relationship between people who decide to share the profits of a business conducted by all or anyone within India’s corporate structure. Everyone is represented by them. When forming a partnership, no formalities need to be followed.
The ability of a firm to make decisions determines its progress. Due to the fact that resolutions do not have to be passed in a partnership firm, decision-making can be quick and efficient. Partner’s rights in a partnership firm are usually broad, and they may conduct transactions on behalf of the partnership without the other partners’ permission.
Partnership firms can have a maximum of 100 members under the new Companies Act of 2013. Banking and other partnership enterprises were limited to ten and twenty, respectively, under the previous Companies Act of 1956.
Two people are required to register a partnership firm. Corporations and LLPs must comply with the law differently. Registration of a partnership firm in India is optional; the partners are free to decide whether or not to register. In spite of this, it is always advisable to register your partnership firm since it cannot receive legal benefits until it is registered.
The following documents are required for the registration of a partnership firm:
-
Deed of Partnership
Partnerships are formed when two or more people come together to run a business. In this contract, you’ll find all the essential business terms and conditions, such as profit and loss sharing, admission of new partners, liabilities, required rules, exit method, and salary information.
Should the company end up in court, it can be used as a legal document. Partnership Deeds, also known as Partnership Agreements, are registered under the Indian Registration Act 1908, so they cannot be destroyed by the partners.
Partnership Deed Contents:
- The partnership’s principal place of business.
- The purpose of the partnership.
- Duration of the partnership.
- The withdrawal of capital.
- Ratio of profits and losses.
- The rules for admitting a new partner.
- Details of the account and audit.
- Partners’ duties.
- The borrowing process.
- Funds from banks and partnerships.
- A partner withdraws voluntarily.
- The rules to be followed.
- Contact information for all partners of the firm.
- Dividends between partners are distributed according to this ratio.
- The name of the firm is decided by all partners.
- Disagreements between partners must be resolved using this method.
The registration of a Partnership Deed also has numerous advantages, such as enabling the firm to apply for a PAN, open a bank account, and deal with GST registration or an FSSAI license.
-
Proof of Firm’s Address
In order to register a partnership firm, the firm’s address must be provided. Utility statements, such as energy bills, water bills, telephone bills, property tax bills, gas receipts, etc., must be submitted if the registered office space is rented.
The owner will also submit a letter of authorization. If the nominated office is occupied, service charges will be presented in the owner’s name. As indicated in the service charge, a NOC from the landlord is also required.
Documents of Partnerships
- To verify identity, all partners in a partnership firm registration in India must have a PAN card. An application for a PAN card can be made if you don’t already have one.
A partnership firm is also required to file tax returns each year under the Income Tax Act of 1961, regardless of its profit or loss. For the purpose of filing income tax returns, partners of a partnership firm are required to obtain a PAN card.rd.
- The address proof of all partners – Any form of government-accepted identity verification is necessary for the registration of a partnership. In order to prove their address, partners are able to submit Aadhar cards, photocopies of the passbooks of their bank accounts, driving licenses, passports, gas connection proofs, or voter identification cards.
-
Registration documents that are additional to the registration documents
In order to enrol an Association Firm as a Partner, you will need to submit additional documents in order to ensure the authenticity of all the information you disclose in the form, as well as the documents you submit. As a partner, you are required to provide documents proving the deed of your organization, identification, and address. In addition, the deed and the documentation must be accompanied by an affidavit that certifies that the information contained in the deed and the documentation is true and accurate.
-
Registration with the GST (Goods and Services Tax)
For the GST registration process to be completed, the firm must submit a PAN number, a proof of address, and proofs of the identity and address of the partners. Signing the application will either require a Digital Signature Certificate or e-Aadhaar verification.
To register for GST, follow these steps:
- Go to the official GST website.
- Form 1 GST Registration Part A must be completed.
- A mobile phone and email will be sent to you with the OTP number.
- Upload the documents required for the business entity in the second section of the registration form.
- A Certificate of Registration will be issued by the Government of India once your application has been approved.
In order to register for GST, you will need to provide a PAN card, a proof of business address, an Aadhar card, bank account information, a canceled check, candidate identification evidence, address verification, a photograph, and a digital signature.
Bottom Line
Among the most popular business forms in India is the partnership firm, which is easy to establish. In many cases, entrepreneurs choose to register their partnership firms online since they only require two partners. For business owners, it is critical to fully understand the requirements of each type of company formation.
Read more,