A Partnership Firm is a traditional form of business structure for businesses that are owned, managed and controlled by an Association of People for profit. Partnership Firms are relatively easy to start and are is prevalent amongst small and medium sized businesses. Partnership Firms are created by drafting and executing a Partnership Deed amongst the Partners and registering the same with the Registrar of Firms.
Partnership firm with the Registrar of Firms, however; it is advisable to register a Partnership Firm due to the added advantages given to registered partnership Firms. Partnership Firms are created by drafting and executing a Partnership Deed amongst the Partners and registering the same with the Registrar of Firms. However, after introduction of Limited Liability Partnerships in India, Partnership Firms are fast losing their prevalence due to the added advantages offered by a Limited Liability Partnerships.
PARTNERSHIP FIRM REGISTRATION
A Partnership Firm is a traditional form of business structure for businesses that are owned, managed and controlled by an Association of People for profit. Partnership Firms are relatively easy to start and are is prevalent amongst small and medium sized businesses.
There are two types of Partnership Firms, registered and un-registered Partnership firm. The Registrar of Firms (RoF) has right to register partnership firm. In India it is mandatory in some states to register a Partnership firm with the Registrar of Firms, however; it is advisable to register a Partnership Firm due to the added advantages given to registered partnership Firms. Partnership Firms are created by drafting and executing a Partnership Deed amongst the Partners and registering the same with the Registrar of Firms. However, after introduction of Limited Liability Partnerships in India, Partnership Firms are fast losing their prevalence due to the added advantages offered by a Limited Liability Partnerships.
Who can register a partnership firm ?
Who has completed the age of majority i.e. 18 years
Is be of sound mind
Is not be disqualified from contracting in any way by the law
A minor can also become a partner subject to the condition that all the partners should give their consent. The minor won’t be able to participate in the workings, however, he will be entitled to the benefits of a partnership. He is personally not liable for any act. He cannot sue other partners.
A firm (which is recognized as a separate legal entity by law)
The main member or Karta of a Hindu Undivided Family (HUF)
What are the types of Partnership Firm ?
A partnership can Oral Partnership (not registered)
A partnership through written agreement and registered with Registrar of Firms (RoF)
Advantages of Partnership Firm Registration
1. Separate Entity (partnership & ownership is separate):
Partnership Firm is a separate legal entity and a juristic person established under the Partnership Act, 1932. Hence, a Partnership Firm has a wide range of legal capacities.
2. Perpetual succession:
Just like a Private Limited Company, a Partnership Firm also has feature of 'perpetual succession', which means uninterrupted existence until it is legally dissolved under the Partnership Act, 1932. A partnership firm being a separate legal entity, is unaffected by death or other departure or cessation of any partner and it continues to be in existence irrespective of changes in partnership.
3. Advantage of expertise and knowledge:
In Partnership Firm, a partners may belong from various fields and they being expert in their respective field, serve on the partnership firm by providing their expert knowledge and practical experience which is definitely in the best interest of the Firm and the business and also to the individual partners sometimes.
4. Owning Property in Partnership Firm’s name:
Partnership Firm being an separate legal entity, can acquire, own, and alienate, property in its own name. The property owned by a partnership firm could be machinery, building, intangible assets, land, residential property, factory, etc., No partner can make a claim upon the property of the Firm - as long as the partnership is a going concern.
5. No stringent compliances like ROC annual filings:
A Partnership Firm is not required to comply with the stringent requirements of the Annual Filings just like a Pvt. Ltd. Companies except that of the Income Tax return filing. Hence, there are no chance of non-compliance and hefty penalties.
6. Small business can take benefit of MSME status:
A Partnership Firm starts from very micro level. At this point profitability and security of its own trade interests is very difficult to manage. Hence, this Partnership Firms can take Undyog Aadhaar for being considered itself as a Small Scale Industrial unit and at least get concession on statutory Govt. Fees and other benefits such as exemptions under Income Tax Act, 1961 and also can take Govt. grants and subsidies.
7. Start up registration for Income Tax benefits:
If your business is uniquely identified and has potential for generating the large scale employment opportunities, then you can register your Partnership Firm under Govt.’s Start-Up India Scheme and take huge Income Tax Benefits for at least 5 years.
The entire process for registration of Company will take at least 5 to 10 working days from the receipt of all the necessary documents and filing with the ROC.
What Documents are required for Partnership Firm Registration ?
Copy of PAN Card of all proposed partners
Passport size photograph of all proposed partners
Copy of Aadhaar Card/ Voter identity card/ Passport/ voting ID card of all proposed partners
Copy of Rent agreement (If rented property)
Electricity/ Gas bill/ Water Bill/ Electricity Bill/ Bank Statement for Office of Company
Copy of Index II or Property Tax Receipt (If owned property)
Landlord NOC (Format will be provided)
Is there any benefits available to a Partnership Firms under Start-Up India ?
Small Companies, Private limited and One Persons Companies are three types of Companies which forms large part of the total companies in India. All these small scale business units / Companies are the actually the growth indicators of the Country’s Economy such as Concepts like Start Up India, Make in India, Digital India, etc… whichare the most successful recent govt. initiated programmes to strengthen the growth potential of the Indian businesses at micro level.
One of the Programme is Start Up India which gives the following enlisted benefits as per the scheme:
1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws.
2. Tax Exemption: Income Tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value.
3. Easy Winding of Company: In 90 days under Insolvency & Bankruptcy Code, 2016.
4. Startup Patent Application & IPR Protection: Fast track patent application with up to 80% rebate in filling patents.
5. Easier Public Procurement Norms: Exemption from requirement of earnest money deposit, prior turnover and experience requirements in government tenders.
6. SIDBI Fund of Funds: Funds for investment into startups through Alternate Investment Funds.
To take above mentioned benefits it very much necessary to get your Company or LLP or Partnership or Proprietary Firm register under this Start Up Scheme. Following is the Eligibility Criteria for Startup Recognition:
The Startup should be incorporated as a Private Limited Company or registered as a Partnership Firm or a Limited Liability Partnership.
Turnover should be less than INR 100 Crores in any of the previous financial years.
An entity shall be considered as a startup up to 10 years from the date of its incorporation.
The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth.
An entity formed by splitting up or reconstruction of an existing business shall not be considered a "Start-up".