If your firm has the partnership registration certificate (registered as a partnership firm) then the firm has the power to sue. It means the firm can sue other partners/third parties to demand their claims and the third party also can sue the firm to demand their claims.
Why register for Partnership Registration
A partnership registration firm is not mandatory. According to the Partnership Act 1932, if a partner wants to register the firm he/she is having an option to register the firm & avail benefits related to the registered firm. The firm should be registered under the registrar of the firm in the state where the office of the firm is situated.
If your partnership firm is registered then the partner of the firm has the right to file a case in court. It’s all up to the partner whether they want to register the firm or not. A partner can register his/her firm during the formation of the partnership while continuing.
There is a great rate of partnership deed in between the partners. In partnership, there are basic terms & condition which is agreed between the partners. It is basically a formal agreement between the parties. In a registered partnership firm the registration of a partnership deed is mandatory.
For registering a partnership firm there are no statutory fees is mentioned under any law. All that is to pay is the professional fees & stamp duty. Now you can register your partnership firm online by filling the prescribed application form. It requires a partnership deed, PAN and TAN.
Benefit of having Partnership Registration
- Right to sue: The partners of the registered firm have the right to sue their co-partners in case of any dispute & they can also file a sued against the firm in case of any issue.
- Right to file a case against a third party: A registered firm has the right to sue the 3rd party to enforce its claims.
- Avail Tax benefit: A registered firm can claim tax exemption under the income tax regime. The firm can avail of several deductions Under the income tax act and also avail the benefits of various schemes.
- Give rights to retiring partner: After the retirement of a partner, he/she has discharged with all the liabilities from the date of his/her retirement. The debarred partner
- Benefit related to claim set-off: If any third party files a case against the registered firm for any claim, then the firm can say to the 3rd party that the firm has owed money to that party & the same can be set off against the claim of 3rd party. This benefit can’t be available to unregistered firms.
- Easy conversion: If a firm is registered it can easily be converted into an unregistered firm, Pvt. company or LLP.
- Right to incoming partner: The incoming partner can exercise his rights against all the existing partners.
- Smooth raising of funds: As compared to a sole proprietorship firm, a registered partnership firm can easily raise funds. In fact, the bank’s also before giving any credit facility check the firm is registered or not.
- Simple formation: The formation of a registered partnership firm is quite easy as compared to any other entity.
ABOUT Partnership Registration
According to the partnership Act 1932 when 2 or more people come together to form a business and equally participate in the profit and loss of the firm, it establishes a partnership firm.
In partnership business, any kind of business, profession, and occupation can be formed. It depends on companies to companies. Formation of partnership is easy.
The person who agreed to form a business is called a partner of the firm. It is basically a contract between the partner. This contract is called a partnership deed. They are two types of partnership firms:
In registered partnership firm it is registered under the registrar of firms, whereas the unregistered firm is not registered anywhere. But for availing more benefits it is advisable to register a firm although it is not mandatory.
Requirement of a partnership registration:
It is required when 2 or more parties sign an in value agreement to establish & operate a business. It is agreed between the partners to share profit & losses. Partnership registration is good for small businessmen who are willing to form a start-up. The involvement of compliance and legal formalities is quite less in partnership. The formation of a partnership is quite easy. If a person is doing business with any other person in the absence of any paperwork shift paper, those persons called partners.
Procedures of partnership registration:
1. Offline process for partnership registration:
- File an application form to the registrar of the firm of the relevant state with the prescribed fees. The application form contains the name of the firm, name of partners, capital contribution, address of the partners. It is necessary that the application form shall be signed by all the partners.
- Selection of name of your choice for your partnership firm.
- Post steps 1 and 2, you will get a certificate of partnership registration. But before getting the certificate the information is duly verified by the registrar. The registrar checks the legal formalities and compliances also.
2. The online process for partnership registration:
- Login/Signup on the relevant official website for partnership registration.
- Fill in all the details as requested by the portal.
- Verify the captcha security code for authentication and verification as a human.
- Once the form is filled and the captcha verification is successful, click on register and raise Form-A (option provided on the portal).
- Enter requested details in Form-A
- Add partners
- Documents upload and attachment
- Form submission on the website
Documents required for a partnership registration:
- Copy of partnership deed
- Stamp paper
- Letter of authority signed by all the parties
- Demand draft
- Current bank account
- PAN Card of the firm
- Address proof of the firm
- ID proof of the partners
- Address proof of the partners
- GST certificate (not mandatory)