What is Partnership Deed, Format, and Registration Process
partnership deed

What is Partnership Deed?

A partnership deed is a legal document in a written format called the partnership deed format that contains an agreement between two persons who want to undertake business together and share the profit and losses when registering a business as a partnership firm.

You can also call it a partnership agreement. In this, two persons agree to share profits and losses in a defined manner to begin a new business and sign and stamp the document.


What is present in the Partnership Deed

The importance of partnership deeds comes into notice as it:

  • Defines the terms and conditions of partnership among the partners
  • Eliminates any possible litigation and disputes among the partners
  • Offers guidelines for all future business activities 
  • Helps streamline the needs among its partners regarding the different policies governing their partnership

Contents of the Partnership Deed

The contents of the partnership deed are placed in a partnership deed format as listed below:

  1. Name of the partnership firm 
  2. Period of partnership
  3. Nature of business of the firm 
  4. Capital contribution
  5. Partner’s drawings from the company
  6. Salary and commission
  7. Profit/loss sharing
  8. Accounts and audit
  9. Loan of the partner
  10. Obligations of the partners, including the duties
  11. Start date, end date/demise date of the partner

Partnership Deed Registration Process

As per the Indian Partnership Act 1932, the partnership deed registration has no time limit meaning you can register a company on the date of its incorporation or any date after duly paying the fees and penalty (if any). 

The stepwise process for the registration is listed below.

Application to the Registrar of Firms in Form A

This provision is also available online. The application should include the following data according to the partnership deed format :

  1. Name and address of all partners
  2. Name of the partnership firm
  3. Duration of the partnership
  4. Location of business 
  5. Date of partner’s joining
  6. Duration of the partnership
  7. Date of business commencement

Filing the Copy

The partners should sign the agreement, including a list of all the rules and regulations. Later they should register it with the registrar.

Payment

Make payment for stamp duties and other essential fees.

Incorporation Certificate Collection

Once the registrar approves the application and enters the company name into the records, the partners can collect the incorporation certificate and claim that their company is legally authorised. 


How do you write a partnership deed?

A partnership deed  includes the following information according to the partnership deed format:

  1. Name and address of the firm and partners.
  2. Nature of business carried out by the firm.
  3. Date of commencement of business.
  4. The Partnership Duration 
  5. Capital contribution by each partner.
  6. Profit sharing ratio among partners.

What are the benefits of a partnership deed?

A partnership deed can help with: 

  1. The regulation of the partners’ liabilities, rights, and duties.
  2. Misunderstandings avoidance between partners by outlining all terms and conditions in advance.

FAQs related to Partnership Deed

What is the minimum age to partner in a partnership firm?

Every adult in India can become a partner in the partnership firm upon completing 18 years.

Is it essential to set up a partnership firm?

Not necessarily, but forming a partnership firm assists in investment, understanding of roles, and the ratio of profit and loss as it is legal. Moreover, it will also help in case of any suit of legal or court formalities.

Is a partnership deed essential to form a partnership firm?

Not, not at all.
But, it is often wise to form a partnership deed, meaning produce your clients, the income tax authorities and the bank with the document.

How many partners are required to form a partnership?

If you are a banking business, you can have a maximum of 10 persons and a minimum of 2 persons.
And up to 20 individuals, otherwise.

Do a partnership firm be compulsorily registered?

No, it is not necessary.
However, to enforce their rights in a court of law, they must register the firm with the Registrar of Firms and Societies.

How are profits and losses distributed among the partners?

It relies on the partner's interest according to their investment, and they must define it before the registration.
Usually, they are equally distributed,

Is there an option to alter or modify the partnership deed?

Of course, you can alter or modify the partnership deed by filling up a form and giving it to the authority concerned or the registrar.

Is there any duration to register as a partnership firm?

No.
It can be registered anytime according to the choice of the partner.
However, it should be before the start of business or after its commencement.

How much is the stamp duty on partnership deeds?

The Stamp Duty is a tax collected by the Central Government and paid following the Indian Stamp Act of 1909. It varies by state and according to the capital brought in by the partners.
For example, in Delhi, the Stamp Duty on Partnership Deed is Rs. 50/-, whereas in Bangalore, it is Rs. 20/-, and in Gujarat, it is Rs. 100/.

Is it necessary to get a partnership agreement notarised?

Yes.
Notarisation and registration are required since it agrees with the partner lawful. Therefore, all partners must notarise the partnership agreement by signing it before a public notary.

Is an oral partnership deed legally binding?

Yes.
Although an oral partnership agreement is valid, it is usually advisable to formalise it since it eliminates future conflict and helps in tax filings and partnership firm registration.

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