Patnership Firm Registration

The Partnership registration form must include the prescribed documents that are Identity proof, address proof, an original copy of the Partnership deed entered into and the proof of the Principal place of business.

Any of the following documents can be used as identity and address proofs:

1. PAN card

2. Passport

3. Driver License

4. Aadhar Card

5. Voters ID

Following documents need to be submitted for Proof of Business premise:

1. Sale Deed if Partner is the owner of the business place.

2. Rent agreement copy in case the office is on rental basis

3. Copy of the latest electricity bill or the tax bill receipt

• First, Partnership Deed needs to be draft and signed by the partners.

• All partners must sign the documents on stamp paper.

• Once the signed Partnership Deed is available, it is registered with the concerned Registrar of firms, and a Certificate of Registration of partnership firm is provided to the Partner.

• After getting Certificate of Registration, one can open a current bank account in the name of the Partnership firm.

Depending on the range of the liability while Partnership firm registration, we can obtain the different classes of partnership.

Partnership Firms can be classified into two types registered and unregistered Partnership firms. The Indian Partnership Act states that the only benchmark 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 a result 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 mainly 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:

An unregistered firm’s 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.

A non-registered 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 your Partnership firm.

Registering a Partnership firm has many advantages. Some are mentioned below:

1. Easy to Form

   Partnership firms are much easy to set up as compare to the other type of entities, and the only requirement in most cases is a Partnership deed and a formal agreement between two or more than two partner to work together.

2. Decision Making

   In a Partnership firm, decision-making is faster as there is no concept of passing the resolution.
   The Partners of Partnership firms in India have the benefits of wide range of powers as they can undertake any business on behalf of the Partner's consent.

3. Raising of Funds

   A Partnership firm can raise funds easily. Even the banks find Partnerships more favorable while sanctioning credit facilities in comparison to a Proprietorship firm.
   A partnership firm has more than one person liable for the business. All partners are jointly responsible for the debt taken by the business. The personal assets of all the partners can be used for the payment of loan. This shows prominent faith to the lenders. Thus, a partnership firm reaps exceptional creditworthiness and therefore can raise more debt for the business.

4. Sense of Ownership

   As every Partner is the owner, the partners have the authority to manage and control the firm's activities. The tasks might be diverse, but people in a Partnership firm are together for a common goal.
   The sense of Ownership creates a higher sense of accountability and belongingness, which helps in creating a rigorous workforce.

5. Cautious Management

   In a partnership firm all Partners have unlimited liability. Unlimited liability prevents the partners from taking impulsive decisions. They are always tried to make sure that not only the decisions taken by them are acceptable to all, but also confirm that no other partner is acting unnecessarily offensive.

6. Uncomplicated Dissolution of Firm

   It is very simple to dissolve the partnership firm. Any partner can ask for dissolution of firm by providing a 14 day notice. The firm can be dissolved on death, insolvency or incapacity to work of any partner. There is no need to fulfill any legal formalities for firm dissolution.

Registering Partnership firms have certain drawbacks as compared to the Limited Liability Partnerships. As the Partnership firms do not provide Limited Liability Protection for the Partners.

In the recent past year, LLPs have become a prime option for small and medium-sized business firms.

The process of converting a Partnership firm into an LLP is given as below:

• To initiate the process of Partnership conversion into an LLP, First All partners have to obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN).

• Then partners have to submit your application to registrar through MCA in Form 17.

  One needs to submit the following attachments along with the form:

  1. Statement of consent of partners of the firm

  2. Statement of Assets and Liabilities of the firm duly certified as true and correct by the Chartered Accountant in practice.

  3. Copy of acknowledgement of latest income tax return

  4. List of all the secured creditors along with their consent to the conversion

  5. Approval from anybody/authority.

  6. 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.

The Licenses, approvals, permits, or registrations will not be directly transferred into an LLP. If there are any properties registered under the Partnership firm before the conversion then the LLP must approach the concerned authorities and initiate the necessary 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 gets 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 have Limited Liability Protection for all transactions conducted after the conversion. The Partners will continue to be personally accountable for all the business operated as a Partnership before conversion.

Post conversion into an LLP, the newly formed LLP must intimate to Registrar of Firms about conversion of the firm into limited liability partnership (LLP) in prescribed Form 14 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.