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Proprietorship

Partnership firm registration is required when two or more parties sign a formal agreement to manage and operate a business and share both the profits and losses.

Registering a Partnership is the right choice for small enterprises as the formation is straightforward and there are minimal regulatory compliances.

The Partnership Act has been in existence in India since 1932, making partnerships one of the oldest types of business entities in India. A partnership firm can even be registered after it is formed. There are as such no penalties for non Registration of a Partnership firm. But unregistered Partnership firms are denied certain rights under section 69 of the Partnership Act that majorly deals with the effects of non Registration of Partnership firms

Depending on the extent of the liability while Partnership firm registration, we can derive the different classes of partners.

Partnership Firms can be classified into two types registered and unregistered Partnership firms. The Indian Partnership Act states that the only criterion to commence the business as a Partnership firm is a finalization and the partnership deed’s execution between the Partners.

Under this act, the Partnership firms don’t need to be registered. As an outcome of this lot of partnership businesses exist as unregistered partnership firms.

There are no penalties for the nonregistration of the partnership firms. Also, a partnership firm can be registered even after formation. But the unregistered partnership firms have been denied certain rights in Section 69 of the Partnership Act, which deals majorly with the effects of the non-registration of the partnership firm.

Here are the reasons why an individual should opt for a registered partnership firm:

A registered firm partner cannot file suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.

No suit to enforce a right arising from an agreement can be instituted in any court by or on behalf of a firm against any third party unless the firm is registered under the Partnership Act.

An unregistered firm or any of its partners cannot claim set-off or other proceedings in a dispute with a third party.

Therefore, it is better to register a Partnership sooner or later.