Before establishing, let’s understand the definition of Partnership. The partnership can be termed as an agreement between a group of people to share their profits or losses arising by virtue of actions carried by all or one of them acting on behalf of all.

If you are thinking to establish banking business the maximum number of members can be 10. If it’s not related to the banking business, the member’s limitation is 20.

The Section 4 of the Indian Partnership Act, 1932 defines the term ‘Partnership’ as – “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”

Features of Partnership

As per the aforementioned definition, there are five elements which collectively constitute a partnership, which is mentioned below –

• There must be a contract
• The contract must be between two or more individuals
• The individuals intending to form a partnership Firm must have a ‘consensus ad idem’ to carry on a business
• The object of the proposed Partnership Firm must be based on sharing profits  
• The business must be carried out by either all or any one of them acting for all.

Starting a Partnership Firm in India

Choosing a Name

Before choosing the name, the partners should keep in mind that the name of the proposed firm must not be identical to another firm having the same nature of the business. Even note that there can be many words which can express or imply the sanction, approval or patronage of the government, the words are ‘Crown’, Emperor’, ‘Empress’, ‘Empire, ‘Imperial’, ‘King’, ‘Queen’, ‘Royal’. But there are exceptions too. If the State Government itself signifies its consent to the use of such words as part of the firm, then you are lucky!

Creating Partnership Agreement/Deed

While oral agreements or quick, one-page contracts may be convenient, especially for one-off projects, they can lead to issues. It is simply worthwhile to invest the time in drafting a detailed contract from the start. The deed must be accompanied with a prescribed fee amount, which varies from state to state depending on where the firm is proposed to be established and contain the below mentioned details as per Section 58(1) of the Indian Partnership Act, 1932 –

• The firm’s name
• The place or principal place of business where the firm carries on its function.
• Name(s) of any other places where the firm conducts business
• The date when each partner joined the firm
• The names and permanent addresses of the partners of the firm
• The duration of the firm, i.e., if it is for a fixed period.

III. Registering Partnership Deed

Partnerships in India are governed by the Indian Partnership Act, 1932 which does not prescribe mandatory registration of the Partnership firms. However, if the partnership firm is not registered, the partners may miss out on a lot of benefits which a partnership firm is entitled to.

When can a Partnership firm be registered?

You know the proverb, “Precaution is better than cure.” Hence, to stay away from courts, do registration as soon as possible.

Certificate

You will be liable for the certificate if the documents submitted to the Registrar for the registration of the firm have been found to be in order and the legal formalities also have been followed sincerely.

Want to Register a Partnership Firm?

If you’re thinking to register a partnership firm, we, at BDS Legal Services, would be happy to help you! Why spend so much money in attorney consultation fees and other miscellaneous expenses when you can do the same at a minimal cost by just letting us know of your requirements from your place?

With a team of qualified legal experts and unparalleled round the clock service, we make sure your experience with us is hassle-free! Call us or leave us a message to know more and we assure, you won’t regret it!

The post Establishing A Partnership Firm In India? Get To Know How appeared first on BDS.