Benefits of Partnership Firm Registration
To start a new business in India one needs to decide what type of business form they are looking for such as the sole proprietor, partnership, company, etc. This is an important criterion as different forms of business have different requirements and also have to offer different benefits to the owners. Among different forms partnership type of firm are quite common as it brings in extra managerial support, capital infusion, and skills. In India, the partnership firms are governed by the Indian Partnership Act, 1932 and as per this act, a partnership firm can either be registered or unregistered. It solely depends upon the partners’ decision whether to go for registration or not.
A partnership venture success depends upon the mutual relation and trust among the partners. However, it is not always the case that the partners having good relations will be having same in the future too. The future is uncertain and thereby it is highly recommended by experts to go for partnership registration. The partnership registration has been further simplified through the partnership firm registration online. Partnership registration offers various benefits to the partners and some of these benefits are mentioned below:
The case against the Third-party: The registration of partnership firms allows the partners to file a case against the third party because of any dispute during business and any such business matters. This benefit is can only be availed when the partners choose to register their firm. Although an unregistered firm cannot file the case against the third party the third party is granted the right to bring in the case against both registered and unregistered firms.
The case against the firm or co-partners: Another benefit of getting the partnership firm registered is that in event of any dispute between the co-partners or partners and firm or partners and ex-partners; the partners are granted the right to file a case. This power is highly valuable and is granted only to the partners of registered firms. However, in the case of criminal proceedings, the case can also be filed by the partner of an unregistered firm against other partners.
Claim set off: With the registration of the firm, the firm is granted the power of claim set off that cannot be otherwise availed by the unregistered firm. If the third party files a case against the registered partnership firm then the firm can also claim the set-off if there is any.
Higher Credibility: Both the registered and unregistered firms are recognized by the Indian Partnership Act, 1932. But still, the registered partnership firms are preferred by various authorities as these firms have higher credibility over the unregistered firms.
Conversion: The partnership firm which is registered under the Indian Partnership Act, 1932 has an edge over the unregistered firm as they can be easily be converted into other business entities such as LLP and Private Company.
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