Partnership Firm Registration is a challenging process to undertake. It starts with choosing the right partner and ends with finally getting the hands on the registration certificate. At each step, you will encounter challenges that will boggle your mind. However, with the correct assistance, you can overcome them. Let’s discuss the challenges of establishing the partnership.
No business entity consolidates familial bonds as much as a partnership firm registration. It is a business entity that has existed since 1932 and has been the choice for most enterprising individuals. However, with time, better business entities emerged. As a result, people started to know the flaws of establishing a partnership firm.
However, regardless of the flaws, starting a firm that puts every partner on equal standing is one people like the most. Therefore, to this day, many ignore the unlimited liability of a partnership firm and go ahead with establishing it.
If you are among them, you will face challenges. Knowing those obstacles will help you take pre-emptive measures to remove them. Let’s begin.
Finding the right partners for partnership registration: The first challenge
Unlimited liability and decisive action — these two features of a partnership firm set them apart from other business entities. Thus, you have to find partners who can bear these aspects of this business entity. If you have an overenthusiastic partner, his zeal will soon vanish as soon as you get the first taste of your failure. An indifferent partner isn’t good either. Although he will help you make logical decisions, he will also be opportunistic and might sink your business at first sight of failure.
Thus, when choosing a partner, choose one that you can trust. However, trust isn’t enough:
1. Verify their background
2. Test them to assess their loyalties, and
3. Choose them only if they fall under your list of eligibility criteria
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Choosing the name for your firm: A simple challenge that difficult to overcome
People harbor a misconception in their hearts about how to name a business entity – they think it is easy. They blissfully decide one and, thinking that it is unique, apply for partnership registration. It is then that they learn about the naming standards for a business entity, which means:
1. No common names,
2. No harmful names,
3. No, swear words,
4. And none that the government prohibits per the Emblems and Names Act, 1950
To overcome this challenge, you must consult with a partner who possesses knowledge about business entity naming conventions.
However, this will only work if you have a friend you can rely on to name your firm. In their absence, you must rely on:
1. Trademark search
2. Domain name search, and
3. Company name search
It will give you an idea about the names from which to stay away.
Drafting the Partnership Deed: The Greatest challenge
A partnership deed is the core document that dictates all the aspects of your entity when you register the partnership. It entails:
1. Details of the partners
2. Information about the business objective of the firm
3. Extend the partnership
4. Dividend information
5. Capital Investment in the firm
6. Duration of the partnership
7. Terms and conditions to which all partners must agree
8. And other information pertinent to the firm’s incorporation.
So, where lies the challenge in this step? Everywhere.
Deciding the terms and conditions of the partnership firm needs to be precise, event-bound, and should instill confidence among the partners. However, the quick-fix desire of many entrepreneurs makes them rush through the drafting process. And, by the time they take the application to the state department to register their firms, it’s too late.
Therefore, you must always contact business consultant experts before establishing a partnership. They will assist you from start to finish and aid you during the documentation, application filing, and drafting procedures.
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It is challenging to establish a partnership firm in India. However, by following the correct steps and asking for aid, you can overcome the challenges establish your business entity in India.