Are you up for looking the registration of a partnership firm and what is the procedure of firm registration? You are on the right spot to know the answer of this question.
According to The Partnership Act 1932, the Partnership Firm Registration is not compulsory but is optional.
Therefore, whenever two or more persons agree they can start any legal business in the shape of the partnership without getting the firm registered, but according to section 69 of the Partnership Act.
See Also: What is Partnership Deed
If the firm is not registered with registrar appointed under section 57 (1) of Partnership Act for this purpose it creates some disabilities and ‘limitations for the partners as well as for the firm,
So it is better to get the firm registered in order to avail the benefits of registration.
Benefits of Registration of a Partnership Firm
A firm registration has the following advantages over the unregistered firm:
SUIT BY PARTNERS AGAINST FIRM
When the firm is registered, any partner can sue against a firm for the enforcement of any right arising from a contract or enforced by the partnership Act But in case of non-registration of the firm this facility is not available.
SUIT BY PARTNERS AGAINST PARTNERS
If the firm is registered, a partner can sue against his co-partners for his rights but this facility is also not available in case of non-registration of the firm.
SUIT BY FIRM AGAINST PARTNERS
A firm cannot claim against partners unless it is registered with the registrar appointed under section 57(1) of partnership Act 1932.
SUIT BY FIRM AGAINST THIRD PART
A registered firm can sue against third parties for the enforcement of his rights arising from a contract. But in case of non-registration, the firm cannot claim against third parties with his own name.
LEGAL PROTECTION
A registered firm has full legal protection from the government as they fulfill all the legal requirements before starting their business. But an unregistered firm has no such protection.
PROTECTION TO INCOMING PARTNER
In case of firm registration, the rights of an incoming registered partner are also protected as he can sue against the firm as well as against his co-partners for his rights. But in case of non-registration, he has no such rights.
PROTECTION TO RETIRING PARTNER
According to section 69 when the firm is registered, the partners have right to claim against the firm as well as against the co-partners.
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So a retiring partner has also right to sue against the firm and against the partners and in this way his rights are also protected at the time of his retirement.
LESS COMPETITION
When the name of the firm is registered, no one can start the business with the firm name and cannot copy the firm’s products and in this way, there are fewer chances of competitive business which may be very harmful to the firm’s business.
CREDIT STANDING
In case of a registered firm, more credit facilities are available to it. Banks and other financial institutions grant loans to the registered firm without any hesitation. So a registered firm can expand and start the business on a large scale.
TRUST AND CONFIDENCE
The general public has more trust and confidence in the registered firm as compared to an unregistered firm. Therefore the success of the business of the registered firm is easier than an unregistered firm.
GOVERNMENT FACILITIES
All the Government facilities are available to a registered firm which is very useful for the success of the business.
TAX BENEFITS
A registered firm can avail the tax benefits as the tax rate is low in case of firms profit as compared to other concern.
Procedure of Firm Registration
According to Section 58, an application for firm registration on a prescribed form is sent by post to the registrar appointed under section 57 by the provincial Government for this purpose which includes the following information:
NAME OF FIRM
The name of the firm with which business is carried on
PLACE OF BUSINESS
The places or principal place at which the business of the firm is carried on or will be carried
NAMES OF PARTNERS
The names of all the partners with their full and permanent addresses and other particulars
DURATION
The period for which the firm wants to continue its business
DATE OF JOINING
The date when each partner has joined the firm must be written in application form.
OTHER PLACES
The names of any other places where the firm wants to carry on business.
NATURE OF BUSINESS
The application should also provide information about the nature of the business.
VERIFICATION OF APPLICATION: The application for the registration of the firm must be signed and verified by all the partners or by their agents specially authorized on their behalf.
PAYMENT OF FEE: The prescribed registration fee must also be paid to the registrar of the firm.
ISSUANCE OF CERTIFICATE: If the registrar is satisfied by the facts provided to him for the registration of the firm.
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He enters the name of the firm into the register ‘kept in his office for this purpose and then issues a certificate. This certificate is known as registration certificate and it is a proof of the registration of the firm.
ANY ALTERATION: After the registration of the firm, if any alteration is made in the name of the firm, location of principal place of business or name or permanent address of any partner etc must be informed to the registrar of the firm with prescribed fee in order to make an alteration in the registration.
