Partnership
What documents are required to register a Partnership Firm In India?
The application for the Partnership registration form must include the prescribed documents like the Identity proof, address proof, a real copy of the Partnership deed entered into and the proof of the Principal place of business.
Any of the following documents can be submitted as identity proof and address proofs.
- PAN card
- Passport
- Driver License
- Aadhar Card
- Voters ID
Proof of Business premise can be established by submitting the following documents:
- Sale Deed in case if the Partner owns the place
- Rental agreement copy if the office is on rental basis
- Copy of the latest electricity bill or the tax bill receipt
How to register Partnership Firms in India?
eauditors can help you register a partnership firm in less than seven days.
Types of Partnership firm
Depending on the extent of the liability while Partnership firm registration, we can derive the different classes of partners.
Partnership Firms can be classified into two types registered and unregistered Partnership firms. The Indian Partnership Act states that the only criterion to commence the business as a Partnership firm is a finalization and the partnership deed’s execution between the Partners.
Under this act, the Partnership firms don’t need to be registered. As an outcome of this lot of partnership businesses exist as unregistered partnership firms.
There are no penalties for the non registration of the partnership firms. Also, a partnership firm can be registered even after formation. But the unregistered partnership firms have been denied certain rights in Section 69 of the Partnership Act, which deals majorly with the effects of the non-registration of the partnership firm.
Here are the reasons why an individual should opt for a registered partnership firm:
A registered firm partner cannot file 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.
No suit to enforce a right arising from an agreement can be instituted in any court by or on behalf of a firm against any third party unless the firm is registered under the Partnership Act.
An unregistered firm or any of its partners cannot claim set-off or other proceedings in a dispute with a third party.
Therefore, it is better to register a Partnership sooner or later.
What are the advantages of Partnership firm Registration?
Partnership firm registration has more advantages than disadvantages. Here, we have mentioned the advantages of Registering a Partnership firm.
Easy to start
Partnership firms are more comfortable to set up, and the only requirement in most cases is a Partnership deed.
Decision making
In a Partnership firm, decision-making is faster as there is no concept such as passing the resolution.
The Partners of Partnership firms in India enjoy a range of powers as they can undertake any business on behalf of the Partner’s consent.
Raising of Funds
A Partnership firm can quickly raise funds as compared to a Proprietorship firm.
Even the banks find Partnerships more favorable while sanctioning credit facilities in comparison to a Proprietorship firm.
Sense of Ownership
As every Partner is the owner, the partners have the liberty to manage and control the firm’s activities. The tasks might be varied, but people in a Partnership firm are together for a common cause.
Ownership creates a higher sense of accountability and belonging, which helps in creating a diligent workforce.
What is the difference between Partnership and LLP?
| Basis | Partnership | LLP |
|---|---|---|
| Cost | A partnership firm is registered through eauditors starting from Rs.5899 | LLP can be registered online starting at just Rs.7899 through eauditors |
| Authority | A partnership firm is registered under Section 58 of the Indian Partnership Act. | LLPs in India are registered under the Ministry of Corporate Affairs, Central Government. |
| Limited Liability Protection | In a Partnership, the partners jointly venture to share the profits and losses. | In an LLP, the Partner is not responsible for any negligence or misconduct of another partner. LLPs also provides liability protection to the owners from the debts of the LLPs. |
| Number of Partners | Partnerships must have two minimum of two partners to be registered. If the number of partners reduces below mandatory two due to death or incapacitation, the firm will stand dissolved. | Similar is the case with the LLPs. At least two members are required to get registered. If the number of Partners reduces below 2, the Partner would still find a new partner without dissolving the LLP. |
How to convert a Partnership firm into an LLP?
Registering Partnership firms do have certain drawbacks as compared to the newly introduced Limited Liability Partnerships. As the Partnership firms do not provide Limited Liability Protection for the Partners.
In the recent past, LLPs have become a prime choice for small and medium-sized business firms.
Let us take a look at the process of converting a Partnership firm into an LLP.
To commence the Partnership conversion into an LLP, Digital Signature Certificate and DPIN OR Director Identification Number (DIN) must first be obtained for all the Partners.
Following documents are required along with Form 17 :
- Consent of Partners for conversion into an LLP
- Incorporation Documents for LLP
- NOC from Tax Authorities
- Financial Statements of the Partnership firm
- List of all creditors along with their consent
- Any other document or information as requested by the authorities.
Once the mentioned documents are submitted to the Registrar after the verification, a certificate of Registration for LLP is issued.
The LLP must then inform the concerned Registrar of firms about converting a Partnership into an LLP within 15 days from the date of conversion through the prescribed forms.
What is the procedure to transfer the license and Registration?
The Licenses, approvals, permits, or registrations will not be directly transferred into an LLP. Also, suppose there are any properties registered under the Partnership firm before the conversion. In that case, the LLP must approach the concerned authorities and initiate the laid down procedure for the transfer of assets.
Hence, before converting a Partnership firm into an LLP, the Partner must clarify all the aspects.
After the conversion into an LLP, the Partnership stands dissolved, and the name of the Partnership firm is removed from the register of the Registrar of Firms. The Partnership firm is considered wholly transferred into an LLP, and the conversion does not affect any existing contracts, employments, agreement, etc.
The Partners will now enjoy Limited Liability Protection for all transactions conducted after the conversion of Partnership into an LLP. The Partners will continue to be personally liable for all the business operated as a Partnership before conversion.
Post conversion into an LLP, the newly formed LLP must include a statement that it was converted from a Partnership into an LLP in all official correspondence for not less than 12 months from the date of conversion.
To convert a Partnership firm into an LLP, visit the eauditors website.
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