How to make a Partnership Deed

The most popular forms of business organisations in India are Partnership and Proprietorship firms. The reason for these businesses getting popular is because of easy set-up and the less number of statutory compliance as compared to LLP's. 

Partnership Deed is the document in which the rights and obligations of the members of a partnership are written. The agreement may be written or oral in the partnership deed. However, for tax purposes, the oral agreement does not have any value, and therefore the agreement is written. 

The following are the minimum essentials of a partnership deed:-

• Name and Address of partners and the  firm 
• Nature of business to be carried on
• Date of Commencement of business
• The period of Partnership 
• Capital contribution by each partner
• The profit-sharing ratio among the partners.
• Pan card of partners 

Though above mentioned are the minimum essentials, the partners may also mention any additional clauses. For example : 

* Interest on Partner’s Loan, Capital, and Interest, if any,

* Commissions and salaries, if any, payable to partners

* Ways of preparing accounts

* Rules to be followed in case of death or retirement, and case of admission of a partner.

How to Register Partnership firm? 

The Indian Partnership Act, 1932 governs the partnerships in India. According to Partnership Act, Registration of Partnership Firms is optional and is entirely at the discretion of the partners. 

They may or may not register the agreement; however, in such case, they may not be able to enjoy the benefits which a registered partnership firm enjoys. Before starting the business or during the duration of the agreement, the registration of Partnership Firm may be done. However, where the firm intends to file a case in the court, before doing so, they have to register the firm to enforce rights arising from the contract. 

The procedure is fairly simple in India, and an application and the prescribed fees are required to be submitted to the Registrar of Firms of the State in which the firm is situated. While applying, the following documents are also required: 

• In Form No.1 the Application for Registration of Partnership 
• Specimen of Affidavit which is duly filled
• True Copy Certificate of the Partnership Deed
• Proof of ownership of the principal place of business or rental/lease agreement thereof.
• Their agents or all the partners must sign the statement or application, or specially authorised on their behalf. The Registrar shall record an entry of the statement when he is satisfied by the documents in a register called the Register of Firms and issue a Certificate of Registration. 

As per Sec 66, The Register of Firms is open to inspection by any person on payment of the prescribed fees and is to be maintained at the office of the Registrar with complete and up-to-date information about each registered firm. 

Anyone can request the Registrar of Firms to view the details of the firm by making the prescribed payment of the fees, and a copy of all details of the registered Firm and the Registrar will give all the details to the applicant. 

The Registration with Income Tax Deptt. is different from the Registration with Registrar of Firms. However, it has to be noted that all firms must apply for Registration with the Income Tax Department and have a PAN Card.

The Partnership Firm would be required to open a Current Account in the name of the Partnership Firm after obtaining a PAN card and operate all its operations through this Bank Account. 

A firm needs to submit the following document to open a current bank account : 

• Partnership deed
• PAN card

• Address Proof of the partnership firm
• Partners identity proof 
• Partnership registration certificate 
• GST certificate
• Not more than three months old copy of electricity bill, telephone bill or water bill