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Partnership Deed – Aspects and Registration

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  • Last Updated : 15 Mar, 2023
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A group of individuals entering into a formal relationship, having a common goal and willing to invest their capital, time, name, and idea altogether to start a business for profit-making is said to be a partnership.

The definition of Partnership, According to the Indian Partnership Act 1932 is ” The relation between persons who have agreed to share the profit of the business carried on by all or any one of them acting for all.”  

When a group of individuals works together, then there could be a possibility of conflict and disputes. To grow a Partnership firm, a good relationship is essential to avoid disputes between the partners “The Indian Partnership Act, 1932” came into force. This act covers all the rules and regulations regarding a partnership firm.

What is Partnership Deed?

When any partnership business starts, many aspects need to be discussed to work smoothly without any estrangement. For Example, Capital to be invested by each partner, share of profits given to each partner, salary, commission, percentage of interest on capital, interest on drawings, etc. A written agreement is made before starting any partnership firm in which details about all the aspects of the partnership are written to avoid future problems or conflicts. Such a written agreement is called Partnership Deed. It is not mandatory to make a written Partnership Deed, it could be oral as well, but it is advisable to have a written agreement. Anything in a written form has greater credibility as compared to orally said.

Aspects of Partnership Deed:

The following aspects are generally included in the Partnership deed:

  1. Name of the Partnership Firm.
  2. Address or Location of the main branch or head office of the Partnership firm.
  3. Rules for Admission, Retirement, Death of any partner of the partnership firm.
  4. Rules regarding the dissolution of the partnership firm.
  5. If the partnership is for a limited period or a temporary goal, then the duration of the Partnership.
  6. Amount of Capital invested by each partner.
  7. The profit-sharing ratio of partners.
  8. Interest on Capital for each partner.
  9. Interest on Drawings for each partner.
  10. Salary and commission to each partner.
  11. Accounts Preparation and Auditing procedures.
  12. In case of any disputes, method for solving such disputes.

Registration of Partnership

In every state, there is a Registrar of firms, to whom any Partnership firm could get itself registered. In this process, a firm writes down all the details regarding the name, location, number of partners, profit sharing ratio, salaries, commission, interest on capital, interest on drawing, etc. in a register and submits it to the Registrar of firms. Although it is not mandatory to register a firm, but it is advisable to register to enjoy some of the benefits, which a firm will get post-registration. For example- a firm can file a suit against any third party only if the firm would be registered, any partner of the firm could file a suit against any other partner only if the firm is registered, etc.

Steps for registration of a Partnership Firm:

Step 1: Fill up all the required details in a prescribed format in an application form, which must be duly signed by all the partners of the firm. The application should contain the following particulars:

  • Name and Location of the main branch of the firm.
  • Location of other branches of the firm.
  • Name and Address of Partners.
  • Date of joining of each partner in the firm.
  • Duration of Partnership.

Step 2: An amount needs to be deposited with the Registrar of Firms termed fees.

Step 3: A Certificate of Registration will be issued by the registrar after the approval, and an entry will be made in the register of firms. 

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