Registration of a partnership firm
Meaning of Registration :
partnership is the result of an agreement between persons (minimum 2, Maximum 20) who agree to carry on a lawful business with the object of earning profit. the name of the firm under which the business is carried on may be recorded with the registrar of Partnership firms. the registration is the evidence of the existence of the firm.
Is registration of a partnership compulsory?
According to the partnership Act of 1932 registration of a partnership is not compulsory with the registrar of partnership firms. In order to encourage the business. the registration of the firms is left entirely to the willingness of the partners of the firms. However, if a firm wants to avail of the benefits of registration,it can do so by filling a statement on the prescribed form and depositing the required registration fee.
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How Registration of partnership firm is done?
the whole process of registration is divided into two parts.
- Submission of a statement
Submission of Application: The application for registration of a partnership firm is submitted to the Registrar of Partnership firms on a prescribed printed form . the Statement is to be signed by all the partners . It contains following particulars about the firm.
- Name of the firm
- The place of the firm.
- The name of any other places where the firm carries on business
- The partners dates of joining the firm.
- The name in full and permanent address of the partners.
- The duration of the firm
Certificate: On receipt of the application for registration of partnership firm, the Registrar examine the particular given in the statement. if the registrar is satisfied with the information supplied the Registrar records the name of the firm in a register called the Register of Firms. The certificate of registration is issued to the partners.
Changes in Contents after Registration of partnership:
If at any time , a firm wished to change the name or place or wants to close the branches or change takes place in the constitution of a registered firm, the registrar after being satisfied , will make the necessary changes in the record according to the revised statement.
Advantages of a registered partnership firm:
A registered firm draws special attractions o enjoys the following advantages over unregistered firms.
- Terms of agreement: the terms of agreement are made clear to each partner in writing which are mostly drawn by ab expert lawyer.
- Basic legal document : if an issue arises among the partners in the form of statement it become a basic legal document for decision.
- Income Tax: if a firm is registered with income tax authorities also, the profit of the firm is divided among the partners. the tax is charged on the income of the partners individually. in case of unregistered firm, it is the firm which pays the tax. the partners of the registered firm , therefore, get the privilege of lower assessment.
- Benefits to retiring partner: A retiring partner is not held liable for the debts of the firm after the date of his retirement. the notice of retirement is filed with the registrar. this notice is considered a valid evidence of his retirement.
- Benefit to the firm: the firm gets the right to sue outside partners in court for the enforcement of its rights.
- benefits to incoming partner: a new or incoming partner can get complete information of the registered firm from the registrar’s office . he can decide properly whether to join the firm as partner or not.
Effect of non- Registration of a Partnership:
The main effects of disabilities of unregistered firm are as under.
- A partner of an unregistered firm cannot file a suit in the court against the firm or any other partner of the firm for enforcing any right arising form the contract.
- An unregistered firm cannot file a suit against fired parties to enforce any right arising from contact.
- The third party, however, can file a suit against the unregistered firm to enforce its rights.