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Partnership Firm Registration under Indian Partnership Act 1932
A partnership firm is a legal relationship formed by the agreement between two or more individuals to carry business as co-owners.
A Partnership Firm is not a distinct legal entity distinct from its members.
Partnership Firms in India is administered by the Indian Partnership Act 1932. As per section 4 of the Indian Partnership Act, Partnership is the relationship between people who have agreed to share the profits of the business carried on by all or any one of them acting for all.
Ø 5 essential elements of a Partnership Firm
1) The contract for Partnership:
Partnership Firm is the result of a contract. It does not arise from status, operation or by inheritance. For example in case of death of the partner in the partnership firm, the son can claim only the share in the partnership property but cannot become a partner unless he enters into a contract.
2) Maximum Partners:
Since the partnership is a result of a contract at least two people shall constitute a partnership. However the Indian Partnership Act, 1932 has not mentioned anything about the maximum number of partners.
3) Nature and purpose of business:
The term business is used in the widest sense and includes every trade, occupation or profession excluding the partnership which is carrying on the business for charitable purpose
4) Sharing of Profits:
The essential elements provide that the agreement to carry on the business must be with the object of sharing profits among all the partners.
5) Mutual Agency:
The fifth element in the definition of partnership provides the business must be carried on by all the partners or any one of them. There should be a mutual agency.
Ø Benefits of Partnership Firm:
1) It is easy to start a partnership firm (https://swaritadvisors.com/
2) The registration is not mandatory
3) Since the registering a partnership firm is not compulsory a partnership firm can choose any name as long as it does not infringe on a registered trademark.
4) Annual Filing is not required by Partnership firm
5) Partnership Deed will determine the ownership of the firm, profit sharing ratio, rights and responsibilities of all partners
6) Bank account can be opened in the name of the partnership firm
Ø Documents required for registering a partnership firm:
1) Partnership Deed
2) Pan Card in the name of Partnership Firm
3) Address proof of the Partnership Firm
4) Identity proof of all the partners
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