Question

Explain the procedure for registration of partnership firm. What are the consequences of non registration?

Answer 1

A. Choose a partnership name. The partners are free to choose any name as they desire for their partnership firm subject to the following rules:

1. The names must not be too identical or similar to the name of another existing firm doing similar business, so as to avoid confusion. The reason for this rule being that the reputation or goodwill of a firm may be injured, if a new firm could adopt an allied name.

2.The name must not contain words like Crown, Emperor, Empress, Empire or words expressing or implying the sanction, approval or patronage of the Government, except when the State Government signifies its consent (in writing) to the use of such words as part of the firm name.

B. Create a partnership deed. The document in which the respective rights and obligations of the members of a partnership are written is called the Partnership Deed. A partnership deed agreement may be written or oral. However, practically an oral agreement does not have any value for tax purposes and therefore the partnership agreement should be written. The following are the essential characteristics of a partnership deed:

• Name and address of the firm as well as all the partners
  
• Nature of business to be carried on
  

Date of commencement of business

• Duration of partnership (whether for a fixed period/project)
  
• Capital contribution by each partner
  
• Profit sharing ratio among the partners
  

The above are the minimum essentials which are required in all partnership deeds.

C. Consider whether additional clauses are needed. The partners may also mention any additional clauses.

D. Do the partnership deed in the appropriate form. The deed so created by the partners should be on a stamp paper in accordance with the Indian Stamp Act. Each partner should have a copy of the partnership deed. A Copy of the Partnership Deed should also be filed with the Registrar of Firms in case the firm is being registered.

E. Register. The procedure for registration of a partnership firm in India is fairly simple. An application and the prescribed fees are required to be submitted to the Registrar of Firms of the State in which the firm is situated. The following documents are also required to be submitted along with the application:

1. Application for Registration of Partnership in Form No. 1

2. A duly filled specimen of Affidavit

3. Certified True Copy of the Partnership Deed

4. Ownership proof of the principal place of business or rental/lease agreement thereof.

F. Sign the application. The application or statement must be signed by all the partners, or by their agents especially authorised in this behalf.