A Partnership is a popular form of business in India where two or more persons share ownership as well as the responsibility for managing the firm and the income or losses the business generates.
There can be two types of partnership – Registered Partnership and Unregistered Partnership (apart from Limited Liability Partnership).
Registration of partnership firm is not mandatory, however, it is advisable to register a partnership firm under the Partnership Act, 1932 due to added advantages and certainty provided under the said Act.
How you can create a partnership firm?
- Choose a suitable Name: you are free to choose any name subject to – the name must not be too identical or similar to the name of another existing firm doing similar business, and the name must not contain words like Crown, Empress, Empire or words expressing or implying the sanction, approval or patronage of the Government, except when the State Government signifies in writing to the use of such words as part of the firm name.
- Finalize Partnership Deed: the partnership deed comprises essential aspects such as name and address of the firm as well as of all the partners, nature of the business to be carried on, date of commencement of business, duration of partnership, capital contribution by the partners, profit sharing ratio among the partners, interest on capital, loan to partners and interest thereon, drawings, salaries or commission, method of preparing accounts, and audit, etc.
- Stamping & Registration: the partnership deed should be on stamp paper in accordance with respective State Stamp Act. The copy of the partnership shall be filed with the Registrar of Firms for registration.
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This information is in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Mind Sync does not accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any information provided herein. On any specific matter, reference should be made to the appropriate advisor.