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WHAT IS A PARTNERSHIP FIRM?
Partnership is a common form of business. Two or more people come together to carry on a business and share the profits and losses. Liability of the partners in a partnership firm is joint and several.
A partnership firm is not a separate legal entity distinct from its memebers. It is merely a collective name given to the individuals composing it. Hence, unlike a company which has a separate legal entity distinct from its members, a firm cannot possess property or employ servants, neither it can be a debtor or a creditor. It cannot sue or be sued by others.
CHARACTERISTICS OF PARTNERSHIP FIRM
A partnership is an outcome of an agreement between two or more persons to carry on business. This agreement may be oral or in writing. The partnership act, 1932(Section5) clearly states that” the relation of partnership arises from contract and not from status.
The person Joining the partnership enters into a contract for rumming the business. According to Partnership Act, The relation of partnership arises from contract and not from status. The contract may be oral or written agreement is made because it helps to settle the disputes if they arise later on.
The nature of liability of partner is the same as in case of sole prorietorship. The liability of partners is both individual and collective. The creditor have a right to recover the firm’s debts from the private propety of one or all partners where firm’s assets are insufficient.
Partnership is formed to carry on a business. As stated earlier, the Partnership Act. 1932(Section 2 (6))states that a “include every trade, occupation and profession, Business Should be law full”.
Registration of a firm is not compulsory under the act. The only document or even an oral agreement among partners required is the partnership deed to bring the partner ship into existence.
No partner can assign or transfer his partnership share to any other person so as to make him a partner in the business without the consent of all other partners.
The purpose of partnershp firm should be to earn profits and share it. In the absence of any agreement, the partner should share profits( and losses as well) in equal proportions.
This leads to be fast decision making and execution. yet he/she can appoint as many as 15 directors in the OPC for administrative functions, without giving any shares to them.
No partner can sell or transfer his share to anybody else without the consent of the other partners. In case any partner does not want to continue in the partnership, he can give a notice for dissolution of the firm.
ADVANTAGES OF PARTNERSHIP FIRM
More resources can be procured from all the partners when compared to sole proprietorship.
Better management of business can be done as the number of persons managing the business are more.
A partnership firm is easy to form. An oral or written agreement between the partners is all that is needed to start a partnership.
The statement of accounts of the firm need not be published and this ensures secrecy.
DISADVANTAGES OF PARTNERSHIP FIRM
OPC is suitable only for small businesses, OPC can have maximum Paid up share capital of Rs.50Lakhs or Turnover of Rs.2 Crores. Otherwise OPC need to be converted into Private Ltd Company.
One Person Company cannot be incorporated or converted into a company under Section 8 of the Act.
One Person Company cannot carry out Non – Banking Financial Investment activities including investment in securities of anybody corporate.
A partnership firm does not have a separate legal status i.e., a firm cannot own property.
PROCESS FOR PARTNERSHIP FIRM REGISTRATION ONLINE IN JAIPUR
A deed of partnership is required to be made out and registered under the Indian movable property Act together with other movable properties involved.
Submit the duly filled Form 1, stamped partnership deed and Lease agrrement to RoF(Registrar of Firms)
This is the Prescribed Registration Form for Incorporation of a firm. It should be filled and along with documents to be submitted to ROF
After verification of all Submitted documents, RoF will issue Certificate of Registration