A Partnership is one the most effective business models and remain the second most common form of business formations. It has several benefits in its model such as allowing a wealthy investor to finance a business while an effective manager can run it. Furthermore, in certain situations, businesses as partnerships do not have to pay income tax as each partner files the profits or losses of the business on his or her own personal income tax return. This way the business does not get taxed separately. Secondly, partnerships are easier to establish and pooling resources, knowledge and skills help them.
A Partnership is easy to form, and the norms and regulations to be adhered to are very low in number as compared to companies.
Usually, a Partnership is formed via a deed. Partnership deed is an agreement between the partners in which rights, duties, profits shares and other obligations of each partner is mentioned.
Partnership deed can be written or oral, although it is always advisable to write a partnership deed to avoid any conflicts in the future as oral agreements and deeds have had little reliability especially in the Indian business stage
Indian Partnership Act, 1932 governs the partnerships. Registration of partnership firm is optional and at the discretion of the partners and can be done at any time – before starting a business or anytime during the continuation of partnership.
However, It is always advisable to register the firm or partnership since registered firms enjoy special rights which aren’t available to the unregistered firms.
This article by CompanyVakil.com studies partnership registration in the state of Kerela. In Kerala, registration of Partnership Firm can be completed through the EGROOPS portal.
What is EGROOPS?
EGROOPS (Electronic Governance for Registration of Partnership Firms and Societies) is the official website for online Registration of Societies and Partnership Firms in Kerala. EGROOPS is an online software system developed by the Centre for Development of Imaging Technology (C-DIT) for the effective registration of Societies to the public. By using this website, any person can avail several services such as :
- Registration of a new firm
- Society Registration(New and change and status, Change in an address)
- Change of Partners
- Firm Registration Status and change in address
Precautions before Registration
Often the presence of similar trademarks or proposed names for the firm during registration can cause conflicts of interest. Thus one should take the precautionary measure of check availability of signs and names before registration through EGROOPS to prevent future litigation conflicts.
Naming Partnership firms – Tips
After taking a precautionary name check against MCA and trademark database, Partners pf a firm should try to adhere to below mentioned rules while selecting the name for their firms.
Names selected during registration must not be greatly comparative or similar to others, making it impossible to separate it from the name of another current firm doing competitive business to prevent the practice of misinforming the customer and to avoid confusion. The driving principle behind this rule is that the goodwill or notoriety of the firm might be affected if another firm could receive a partnered name.
Secondly, as per Section 58(3) of Indian Partnership Act, 1932, the name of a firm should not contain words like Crown, Emperor, Empress, Empire or words communicating or inferring the endorse, endorsement or support of Government with the exception of when the State Government connotes its assent in composing for the use of such words as a component of the firm name.
EGROOPS Registration procedure
The following steps should be followed to utilize the EGROOPS platform for Registration :
Step 1: Visit the home page of EGROOPS at http://egroops.kerala.gov.in/
Step 2: Select the new firm registration button (located on right side of the of the homepage) and submit your information along with photo and identity proof on the next page and then submit the form.
Note :You must be one of the partners of the firm to register.
Step 3 : After submitting you will receive a system generated password and number which will also be sent to your mobile and email address.
Step 4 : Now login to the EGROOPS Portal page using the provided number id and password. Once you log in you can launch an application for initiation of registration of a partnership firm. You can do this by clicking in the link for the same in the center of the screen.
Step 5 : You must now provide name for the partnership as well as an firm address
Step 6: Now you must provide details of others partners and upload supporting documents. The EGROOPS system can accept 4 categories of the partner which are as follows: normal partner, minor partner, power of attorney and company. Based on the type selected, different information would have to be submitted. For partners, details like name, age, gender, guardian details, address, mobile number, etc must be provided in the form.
Note: In the situation wherein a company, one person is elected as the sole representative of the company in all legal matters; his/her details should be entered in the space provided firsthand. After submitting partner details of the same and uploading required documents you can click on the add partner button to add all partners in the firm as required.
Step 7: Upon adding all relevant information of the partners, the details of all branches of the firm must be added using the “ Add Business Place” option if applicable
Step 8: After finalizing all required information about the business and partnership and uploading all supporting documents, you can make the online payment for registration of partnership firm via Money order, Cash payment or e-payment.
Step 9: On receiving payment, you will receive a confirmation message and reference number for future reference, the same will send to the registered mobile number and email ID. Applicants should keep this reference number for future use. Applicant should complete the attestation of the application with the registered attesting officer like Gazette Officer or Advocate or Attorney or Vakil or Honorary Magistrate or Chartered Accountant or Income-Tax officer.
However, if the application is rejected, the application will be made available in the EGROOPS account with its problems. The registered person can view the rejected application by login into EGROOPS and resubmit the application after rectifying the defect.
Step 10: If the registration application was successful, by clicking on “Print Acknowledgement”, you can view and download the PDF form for partnership firm registration certificate.