What is Partnership Deed?
The partnership deed must be acknowledged by both the buyer and owner to enable them to fully understand it. If there are more than two partners in a business deal, the owners and buyers should acknowledge that they have a partnership deed. Here we have mentioned how to do the partnership deed drafting. Partnership firm is often a term that refers to the collaboration between these business partners as agreed in the partnership deed.
Name of a Partnership Firm
The following rules apply to all partners:
- Names of the organization should not be the same as the others who is doing similar business to avoid confusion. This rule is in order to protect the goodwill and reputation of a company if a new firm adopts an allied name.
- There are certain names which should not be used like Emperor Empress, Empire, or words expressing the approval, patronage, or sanction of Govt, except when the State Govt consents in writing to the inclusion of such words as part the firm name
How do you create a Partnership Deed
The Partnership Deed is the document that outlines the rights and obligations of each member of a partnership.
Written or oral, a partnership deed agreement can be made. Practically, an oral agreement is not valid for tax purposes so it should be written. Below are the following points of a partnership agreement:
- Name of the partners along with the organization name
- Nature of the business to be conducted
- Mention the time duration of the partnership
- Each partner contributes capital
- Participation ratio between the partners
These are the essential elements that must be included in any partnership deeds. Additional clauses may be added by the partners.
How to Register a Partnership Firm In India
The Indian Partnership Act (1932) governs partnerships in India. The Partnership Act allows for registration of Partnership Firms, but it is completely at the partner’s discretion. Partners can register or not their Partnership Agreement.
They may not be eligible for the same benefits as a registered partnership firm if the partnership deed has not been registered.
The registration of a Partnership Firm can be done prior to the start of the business, or during the continuation of the partnership. If the firm plans to file a lawsuit in court to enforce rights arising out of the contract, registration must be completed before the case is filed.
It is very easy to register a partnership firm in India. The application along with the required fees must be submitted to the Registrar for Firms in the State where the firm is located.
The importance of a partnership deed?
A partnership deed is a document that identifies the legal obligations of partners towards the firm. It no longer required registration.
Benefits of a well-contracted partnership deed
It balances and adjusts all the rights, duties, and responsibilities between partners
This helps to prevent any misinterpretation or confusion between the partners
It is used to settle disputes between associates.
It eliminates uncertainty in the profits-loss ratio between partners.
It determines the job roles, and each partner has their own set of tasks.