A general partnership is a business structure wherein two or more persons come together to own and manage a business. The foundation of such a partnership lies in the Partnership deed that incorporates the terms of conducting the partnership business.
The partnership deed details the partner’s responsibilities, ownership interests, profit and loss sharing ratio among partners, nature of business, dispute settlement, dissolution process etc.
A general partnership must have a minimum of two partners. A partnership engaged in banking business can have a maximum of 10 partners while partnerships engaged in any other businesses can have a maximum of 20 partners.
The Partnership Act, 1932 governs such general partnerships in India.
A Partnership does not enjoy the status of separate legal entity independent of the partners. A Partnership business also attracts unlimited liability i.e if the assets of your business does not compensate your debt then your personal assets will be attached to pay that debt or liability.
A partner is personally liable for the debts of the firm and also is bound by the liabilities incurred by other partners while acting on behalf of the partnership business.
It is not mandatory for a partnership to be registered. However the major disadvantage of not registering is that a partner will not be able to file a suit regarding any dispute against third parties or even against other partners without having registered the partnership.
It is advisable to get the executed partnership deed registered at the Sub Registrar office under whose jurisdiction the office of the partnership firm lies. Post registration the partners may apply for a PAN card in the partnership’s name and open a bank account.
How to Choose A Partnership Firm Name?
The partners forming part of a partnership business entity can at their will choose any name for their business. This is however subject to the following rules. As per section 58(3) of the Indian Partnership Act, 1932:
A partnership firm should not contain the following words in its name. These include Crown, Emperor, Empire, Empress, Imperial, King, Queen, Royal or other words that indicate sanction or approval by the government.
The name should not be too similar to any of the names of the existing firms engaged in similar businesses. The idea behind such a rule is to avoid injuring the reputation or goodwill of the existing firm if the new firm adopts a similar business name.
Procedure for Partnership Firm Registration
- Step 1- Application for the registration
- Step 2- Verification of application for registration
- Step 3- Documents to be attached to the application for verification
- Step 4- Fee for registration
- Step 5- Naming the partnership firm
- Step 6- Entry of Statement in a register
- Step 7- Open an bank account
Documents needed for Partnership registration
- Original copy of partnership deed signed by all partners.
- Form 1- Applying for registration under the Partnership Act.
- Affidavit informing intent to be registered as partners.
- Rent or Lease agreement of the place of business (not needed for business run in self-owned space).
How do Clidel helps you
We have our own professionals and attorney to draft your deed and they will provide you the regular updates right from collecting the details and getting done with your Registration as well they will provide you legal advice at the end to end point.