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Is Partnership Registration Mandatory ?


Is Partnership Registration Mandatory ?

Is Partnership Registration Mandatory as the name suggests is a firm formed by 2 or more people who wish to do business together. It is an association of persons who want to perform business activities. In a partnership every partner has unlimited liability and is governed by Indian Partnership Act, 1932.

Another form of partnership that is formed nowadays is limited liability partnership wherein like a company every partner has limited liability. This is governed by Limited Liability Partnership Act, 2008.

As per Part VII of Indian Partnership Act, 1932 partnership registration is not mandatory. That means you do not need to form a partnership deed and get it registered with the Registrar of Firms. You can commence business without any registration. Although it is always recommended to register your firm as it has numerous benefits.

Need Help with your limited liability partnership registration

- Can file a suit: A partner in a Registered Partnership Firm can file a suit against other partners. He can fight for his rights and also make claims for his share in contracts.

- Set off debts: A registered firm can set off debts received from its partners when a dispute with a third party arises. The set off allows the partners to mutually adjust their loans. This benefit cannot be availed if a partnership firm is unregistered.

Can register anytime

As per Section 58 of Indian Partnership Act, 1932 if partners want to Register their Firm, they can do so anytime. There is no time limit to register a firm.

All the partners have to do is along with the partnership deed file necessary documents with the Registrar of Firms that has jurisdiction in the area where Firm is or will be situated.

Contents of partnership deed

A partnership deed is a Legal document that contains all the details regarding a partnership. It is like a preamble that tell you the terms at which partnership is formed. A partnership deed includes details like profit sharing ratio, capital brought in by each partner, status of a partner, that is, sleeping or active, terms of retirement of a partner and dissolution of firm.

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