Gujarat Partnership Firm Registration
Gujarat Partnership Firm Registration
A partnership is one of the most common forms of business entity in India. The compliance requirements for setting up such firms are lesser when compared to that of a Limited Liability Partnership (LLP) or a Company. A partnership firm is formed by two or more individuals with the preparation of a partnership deed. In this kind of a venture, all the partners are eligible to share the profits and losses of the business in an agreed rate. In this article, we look at the procedure for completing Gujarat partnership firm registration.
Partnership Firm Registration
Partnership firm registrations in India are governed as per Section 4 of the Indian Partnership Act, 1932. The Act states that the registration of a partnership firm is not mandatory as it relies on the decision of the members to register their firm. It can be registered with the state’s Registrar of Firms (ROF) that enables individuals to run their businesses by following legal bindings. Non-registration of the firm, though not illegal, would nullify certain benefits which is otherwise entitled to the entity.
A partnership deed is a kind of document that includes the responsibilities and rights of all the parties involved in a business operation. This document regulates the conduct of the business. It is also helpful in preventing disagreements and disputes over the role of individual partners in the company and the benefits which are due to them. The following details are to be mentioned in a partnership deed:
- Details of all the partners in a firm.
- Duration of Partnership.
- Nature of the business conducted by the firm.
- The capital contribution made by each partner.
- Profit and loss percentage shared among the partners.
- Date of commencement of the firm.
Besides this, the following additional clauses must be mentioned in the deed:
- Salaries and commissions to be settled among the partners.
- Interest on the partner’s capital.
- Allocations of roles of the partners.
Note:- When a partner is added, removed or deceased, a partnership deed has to be formed in a stamp paper in accordance with the Indian Stamp Act. It is mandatory for every partner to possess a copy of the partnership deed.
Choosing the Partnership Name
Partners are free to choose any name of their choice for the firm. However, they should always ensure that the desired name does not infringe any copyrights or trademarks of a third person. Hence, it is recommended to obtain a trademark for the preferred name of the Partnership Firm; so as to avoid a third person using the same name or tagline for his/her company. However, certain conditions have to be followed while choosing a name for a firm.
- The name shouldn’t be identical or similar to an existing firm that may be involved in a similar business.
- The desired name should not include terms like Empire, Crown, Emperor, Empress or terms that signifies approving, sanctioning, or patronage of a government. In exceptional cases, these terms can be used on the endorsement of the State Government.
Advantages of Partnership Firm
Easy Formation: It is easier to form a Partnership Firm as not many legal formalities are involved in it. The founder partners can initiate their operations as soon as a Partnership Deed is formed.
No Statutory Audit: A Partnership Firm need not register the audited financial reports with the Registrar of Firms. Hence, the Partnership Firm is not required to make its books of accounts audited, except if if its turnover exceeds prescribed limits.
Compliance and Regulations: The compliance requirements to run a partnership business are considerably less when compared to a Company or LLP.
Winding up: A partnership Firm can easily be closed by entering into a dissolution deed.
Larger Resources: The members in a partnership firm can potentially render more resources for business operations when compared to a sole proprietorship, given the quantum of people making contributions.
Better Management: All the partners of firm manage the business against a proprietorship firm where a single man is vested with the affairs.
Sharing of Risk: In Partnership Firm every partner bears the risks individually, which in-a-way curtails their individual burden.
The following documents have to be possessed to register a partnership firm.
- Application for Partnership Registration in Form No. 1.
- An affidavit stating the partner’s intention to join the firm.
- Partnership Deed signed by all the members and registered by the Sub-Registrar.
- Passport size photographs.
- Aadhaar Card.
- Ownership proof of the primary location of business or lease/rental agreement of the property.
Application Procedure for Gujarat Partnership Firm
The following are the steps to register the Partnership Firm in Gujarat:
Step 1: Duly fill the application form
Form 1 has to be duly completed by the members of a partnership firm.
Step 2: Attach the required documents.
The applicant has to attach all the required documents along with the application form.
Step 3: Sign the application
Once all the documents are attached properly, the partners must sign the application and submit it to the Registrar of Firms of the State of Gujarat.
Step 4: Issuing the Certificate
The register, after viewing the application, makes the required changes and then enters the firm in the ‘Register of Firm’s’ log. The concerned authority will then issue the Certificate of Registration in due course of time.