Partnership Deed

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Procedure to Draft Partnership Deed

This is very simple to get the format of Partnership done. By just doing three simple steps:



step1

Log in to our website----->Go to the page of Partnership Deed

step2

Fill up all the required fields like the address of the firm, address & identity proofs of all partners, stamp duty, etc.

step3

After providing all details our team of lawyers will work on the draft of partnership deed & once the drafting is done it will be available for you to download on our site.

Please note:You can avail of the partnership deed sample by logging in to our Site.You can make changes to Draft.

What is Partnership Deed?

If one needs to understand the partnership deed, before that he/she needs to know how does the partnership deed come into existence. When two or more people want to start a new business & to share the profits & losses they come together to form a partnership such written agreement is known as ‘Partnership Deed’. One can also call it is a ‘Partnership Agreement’. And when such business gets registered by its own name the same is called as a ‘Partnership Firm’.

Partnership Deed Meaning

Partnership Deed is a written Partnership Agreement. It is basically made when two or more people want to start a new business they come together under the mutual understanding with the only purpose to do business & share profits & losses in the decided manner.

Key Points to Remember While Drafting Partnership Deed:

1. Number of Members:
In a Partnership, there is a minimum requirement for two members. Previously there was a limitation on the number of partners as follows:

  • a. Banking business-Less than or equal to ten
  • b. Non-Banking business- Less than or equal to twenty

If there are more partners than the given above then it becomes illegal to continue the business of the partnership.
2. Minimum capital requirement:
There's no limitation on the requirement of capital at the beginning of the business. Partners can start of the business with as much as minimum capital they want. The calculation of stamp duty also depends on the amount of capital which has been put by partners.
3. The name should be different:
While deciding a name for the firm the care has been taken that it should not indicate any undesirable intention, it should be simple & easy.

What factors are needed to form a partnership deed?

A Partnership Deed is mainly formed on the basis of the following five factors which are given as under:

  1. 1. A partnership deed is basically said to be a contract between the partners of the business. Which binds all the partners in a legal relationship between the partners.
  2. 2. The minimum requirement for forming a partnership is of two members & there is a limitation of ten in case of banking & twenty in case of non-banking business.
  3. 3. All partners should have a mutual understanding for doing a business.
  4. 4. The ratio for profits & losses should be decided among all the partners well in advance.
  5. 5. All partners should maintain the relationship as a principal-agent. Every partner is answerable for the actions of other partners.

Important clauses/Contents of the Partnership Deed

Any standardized partnership deed format should have the following clauses which are important from the firm point of view:

  • Names and Addresses of the firm and its main business;
  • Names and Addresses of all partners;
  • A contribution of the amount of capital by each partner;
  • The accounting period of the firm;
  • The date of commencement of partnership;
  • Rules regarding an operation of Bank Accounts;
  • Profit and loss sharing ratio;
  • The rate of interest on capital, loan, drawings, etc;
  • Mode of auditor’s appointment, if any;
  • Salaries, commission, etc, if payable to any partner;
  • The rights, duties, and liabilities of each partner;
  • Treatment of loss arising out of insolvency of one or more partners;
  • Settlement of accounts on the dissolution of the firm;
  • Method of a settlement of disputes among the partners;
  • Rules to be followed in case of admission, retirement, the death of a partner; and
  • Any other matter relating to the conduct of business. Normally, all the matters affecting the relationship of partners amongst themselves are covered in partnership deed.

As such there is no such standardized format of Partnership Deed, all the relevant topics should get covered in the partnership deed & same should be signed by all the partners.

Partnership Firm Registration

  • Registration of a Partnership firm is optional under Indian Partnership Act, 1932
  • Registration of the partnership firm can be done at any time before starting of the business of while business is in its continuation.
  • It is always recommended to register the firm as it enjoys more benefits rather than unregistered ones.

What is the necessity to create a Partnership deed

A partnership is a business concern which deals with purely business aspects among its partners. A written document is much more useful than the oral agreement made between two or more person. As to outline & clearly specify business needs we should the creation of partnership deed is the foremost factor. The importance of creating a partnership deed is given as under:

  • 1. A well-drafted partnership deed specifies the rights, liabilities of the partners, profit sharing ratio among partners, capital requirement, etc.
  • 2. It avoids the confusion among the partners & state clearly about
  • each & every partner in detail.
  • 3. In future, if any dispute has arisen then it can be settled through referring the partnership deed.
Requirement for Initiating Partnershp a Firm - LegalDocs

Procedure of Registration of Partnership Firm

I] The first & foremost step while registering a Partnership Firm is to collect the following documents:

a. Address Proof of your firm, e.g. - current account details or any other license applied in the name of your firm.
b. Identity proof of partners - PAN Card, Voters' ID card, Passport etc.
c. Address proof of partners - electricity bills, ration cards, Aadhaar Card, Passport etc.
d. Attested Partnership Deed
e. Stamp Duty of appropriate value (Through Stamp papers){1}
f. Photographs of all partners.
g. Completely filled application form - Contact numbers of relevant authorities and application forms can be found here :

1. Delhi: Currently, for the state of Delhi, the firm is first required to be registered with the jurisdictional Sub-Registrar office (where the routine property registrations are made) so that due stamp duty is assessed properly by the government official. Once the same is registered as a document with the State Revenue Authority, it needs to be registered with the Registrar of Firms and Society.

http://www.delhi.gov.in/wps/wcm/connect/doit_industry/Department+of+Industries/Home/Downloads/

2. Mumbai:
https://rof.maharashtra.gov.in/Common/ContactUs.aspx

3. Kerala:
http://egroops.kerala.gov.in/

4. Chennai:
http://www.tnreginet.net/english/tel06.asp

Kindly take a note that each state is having different provisions regarding the registration

For manual registration time limit is one month. So it is always preferable to apply for registration online as it is less hassle-free.

As well after finalizing the Draft of the Partnership Deed, it should also notarize the same on non-judicial stamp paper of Rs.200 or more & should be signed by all partners.

To make a Partnership Deed you must log in on our website & fill the required details asking for the following credentials:

II] The second step is to submit the application to the Registrar of Firms along with very much little of fees.

After completion of all the formalities, Registrar should provide the Certificate of Incorporation & enter the name of the firm in his books.
Also, a separate PAN Card should be obtained from the IT Department in the name of the firm.

Current Account Opening

A current account is a type of deposit account that helps the professionals and businessmen to run their business. Businessmen can avail various benefits by Online Current Account such as:

  • Unlimited transactions
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  • Online banking services

Online current account reduces the hassle and provides the benefit to complete the banking process anytime and anywhere.

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Partnership Deed FAQs

What is the meaning of partnership?

Partnership means when two or more person is coming together to start a business with an intention to share profits & losses it is said to be a ‘Partnership’. & the business which was run by them under the name of the registered firm is called as ‘Partnership Firm’.The people coming together to form a partnership is called ‘partners’.

What is Partnership Deed?

A Partnership Deed is a written instrument made between two or more person who is obliged to carry on the business under the name of partnership firm. It is the most important document which conveys the terms & conditions of the firm. It also mentions the duties, rights, liabilities & other business related details. This is the document on which all the functions of the business among all the partners have been decided.

How many maximum numbers of partners is required?

As per The old Companies Act,1956 there was a limitation on the maximum number of the member that is for banking business it's 10 & for non-banking business its 20.

What is the main purpose behind making a Partnership Deed?

The deed was made with the intention of setting out the clear business intention & role of partners & to express the business requirements in a precise form on the paper. As the written document is more valid than the oral one.

Is registration is required?

Registration is optional for partnership, but it is always advisable to register the partnership firm. The reason behind registration is simple that registered partnership firms enjoy some more rights than unregistered firms.One should note that registration with the Income Tax Department is different than registration of firms with Registrar of Firms. Registration for income tax in anyhow mandatory for all the firms.

What is the time period for the registration of partnership firm?

There is no specific time is given to do registration for the partnership firm. A partnership firm can get registered at any time that is at the beginning or at while business is in continuation.

What is the required stamp duty for partnership deed?

A Partnership Deed is a written document which gives all the important aspects which are important from the business point of view. The minimum requirement is of Rs.200 on non-judicial stamp paper.

What are the benefits for registered partnership firm?

As we all know that there is no compulsion on the registration of the partnership firm but there are certain benefits which can be enjoyed by only registered partnership firm. They are given as follows:
In case of a dispute between partners or between firm & partners or between ex-partners & firm or between ex-partners & continuing partners then it becomes easier to approach the court for the resolving the same.
If the firm is registered then it becomes easier to file a dispute against the third party.
In case, the third party files for the suit against the firm, then the can always ask for set off a claim which means the third party owes money to the firm
These are the major benefits which are only available for registered firms.

What if the partners decide not to register the firm? Is that going to affect the functioning of the business?

It is absolutely of no issue if the firm did not register. There is no reflection on the functioning of the business. The only thing is that the firm will not be able to enjoy some benefits which are available for the registered firms.

What are the benefits enjoyed by the unregistered firm?

As every coin has two sides there are also some benefits which are only enjoyed by unregistered firms. They are as follows:
An unregistered firm cannot file a suit in the court of law
An unregistered firm does not hold any right even for criminal cases to file in a court of law.
In case if any dispute has arisen between the partners or between partners & firm or between partners & ex-partners, there is no right to the any of the above to refer the dispute to the court of law for resolution.

What is the format of the Partnership Deed?

As it is a legal document containing the formation of a legal entity. You can find the sample of the partnership Deed on our website.

What is the procedure for online registration of Partnership Firm?

For registration of partnership firm there is a very simple procedure which can be done on our website & we can help you to get it done as given below:
A] For registering a partnership firm first you need to log in on our site, after that, you need to provide all the below details in the given boxes:
a. Address Proof of your firm, e.g. - current account details or any other license applied in the name of your firm.
b. Identity proof of partners - PAN Card, Voters' ID card, Passport etc.
c. Address proof of partners - electricity bills, ration cards, Aadhaar Card, Passport etc.
d. Attested Partnership Deed
e. Stamp Duty of appropriate value (Through Stamp papers){1}
f. Photographs of all partners.
g. Completely filled the application form
After completion of application form, the draft deed of the partnership will appear on our screen
after the draft has been finalized you need to take print out of the same on non-judicial stamp paper up to Rs.200
Along with the above documents, an Affidavit of all partners for their free consent on the stamp paper of Rs.10 & court fee stamp of Rs.3 on the application form should be pasted.
B] Once all the above requirements are fulfilled one should submit the same application form with prescribed fees to Registrar.

C] After completing all the formalities Registrar should provide a Certificate of Incorporation & enter the name of the firm in his books.

Kindly note that for manual registration time period is one month.

What factors should be included in a Partnership Deed?

A Partnership Deed mainly includes all the factors on which working of the partnership depends. But out of all here are some major factors which have to be there :

The total amount of capital contributed by each partner;
Division of Profit and loss among partners
Management of business
Details of borrowings like loans & advances
Details of bank accounts
The rights, duties, and liabilities of each partner
Method of a settlement of disputes among the partners
Rules to be followed in case of admission, retirement, the death of a partner

Is there any restriction on the introduction of personal property while setting up a business?

In Partnership Firm, the nature of the liability of partners is unlimited. It means one can also introduce his/her personal assets. So there is no restriction on how much capital shall be involved by every partner. It differs from partner to partner.

How all the profits, commissions or losses, payments have been divided among all the partners?

When it comes to sharing profits & losses among partners. There is no such specified ratio. Generally, all profits & losses of the business should be divided equally. And a partner should not get anything except the share of his profit as decided earlier & he should not bear the loss much more than what has been decided as per Partnership Deed.

In what way a partnership can be dissolved?

A Partnership Firm can be dissolved in any of the following ways:
a)If formed for a specific period of time, on the expiry of the term.
b)If it is created with the purpose of performing a certain act, on completion of the act it can get dissolved
c)Death of any partner
d)When a partner becomes insolvent
e)Dissolution by mutual agreement between partners
f)When an event happens which makes the business unlawful, the firm gets dissolved
g)After giving notice from all the partners the firm gets dissolved
h)If the court finds out in a suit that any unfavorable situations then the court may dissolve it.

What about the rights, liabilities & share of profit or loss in case of death or retirement of a partner?

In case of retirement of the partner all the rights, liabilities shall stand still as he is the outgoing partner, he does not carry any of the rights after retirement.In case of death of the partner. If partnership deed is itself silent then the partnership continues & successor of the deceased partner can take his place. But if there is no such mention in the Deed then Partnership stand dissolved.
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