A partnership is defined as a relation of two or more persons who have come closer for the business objective and agreed to share profit/loss arising out of the said business, carried on by every or any of the partners.
artnership firms in India are set up and regulated by the provisions of the Indian Partnership Act, 1932. The establishment process of a partnership firm under this act leaves the partnership deed registration with the Registrar of Firm (RoF) at the partners’ will in the firm.
The partners of the firms can carry out partnership firm registration taking into account the advantages of registration. Let’s plunge into the post below to perceive the benefits of partnership firm registration in India!
The partners of the registered partnership firm can drag third parties into the court for the resolution of disputes that arose during business or the other matter regarding the partnership firm.
While an unregistered partnership firm does not get the right to file the suit against a third party for resolution of their disputes until the process of deed registration has been carried out. Nevertheless, the third party always possesses the right to file the case against a partnership firm no matter whether it is registered or not.
There are only a few who knows when the dispute takes place between the partners, whether for the sharing of profits or due to any other matter regarding operations of the partnership firm, the resolution can be best extended by the Court of Law.
Whereas, the partners of an unregistered partnership firm can’t enforce any clauses of the partnership deed. To enforce the said clauses, the partnership firm registration will be needed by following the procedure prescribed for the same.
The partnership firm registration provides the partners with the right to claim set-off. When any third-party files a case against the partnership firm, the firm can claim the set-off if any against the claim of the third party. The said right to claim set-off is not available to unregistered partnership firms.
When contrasted with an unregistered partnership firm, a registered partnership firm enjoys higher credibility. Nonetheless, both registered and unregistered partnership firms are legal and valid under the said Act, the registered firm is often preferred by the authorities over the unregistered one.
A partnership firm registered with the Registrar of Firm (RoF) possesses smoothness as compared to an unregistered firm for conversion. The conversion of the partnership firm into other entity like private limited or LLP can be performed easily.