Formation of Partnership Firm
When registering a partnership firm in India for startups, there are some basics that need to be covered. Partnership and proprietorship are the two most popular forms of business organisations in India. The reason why these two forms of organisations are so popular is because they are relatively easy to set-up and the number of statutory compliance requirements needing to be followed by these forms of organisations is relatively less than the statutory compliance requirements applicable to LLP’s and companies. As such, this article focuses on the registration process for the partnership firm.
Choose a partnership name
The partners are free to choose any name as they desire for their partnership firm subject to the following rules:
- The names must not be too identical or similar to the name of another existing firm doing similar business, so as to avoid confusion. The reason for this rule being that the reputation or goodwill of a firm may be injured, if a new firm could adopt an allied name.
- The name must not contain words like Crown, Emperor, Empress, Empire or words expressing or implying the sanction, approval or patronage of the Government, except when the State Government signifies its consent (in writing) to the use of such words as part of the firm name.
Create a partnership deed.
The document in which the respective rights and obligations of the members of a partnership is written is called the Partnership Deed. A partnership deed agreement may be written or oral. However, practically an oral agreement does not have any value for tax purposes and therefore the partnership agreement should be written. The following are the essential characteristics of a partnership deed:
- Name and address of the firm as well as all the partners
- Nature of business to be carried on
- Date of commencement of business
- Duration of partnership (whether for a fixed period/project)
- Capital contribution by each partner
- Profit sharing ratio among the partners
The above are the minimum essentials which are required in all partnership deeds.
Consider whether additional clauses are needed
The partners may also mention any additional clauses. Some of the examples of additional clauses which may be mentioned in the partnership deed are mentioned below:
- Interest on the partner’s capital, partners’ loan, and interest, if any, to be charged on drawings.
- Salaries, commissions etc, if any, payable to partners
- Method of preparing accounts and arrangement for audit
- Division of task and responsibility, namely, the duties, powers and obligations of all the partners.
- The rules to be followed in case of retirement, death and admission of a partner
Do the partnership deed in the appropriate form
The deed so created by the partners should be on a stamp paper in accordance with the Indian Stamp Act. Each partner should have a copy of the partnership deed. A Copy of the Partnership Deed should also be filed with the Registrar of Firms in case the firm is being registered.
Decide whether or not to register the partnership firm
Partnerships in India are governed by the Indian Partnership Act, 1932. As per the Partnership Act, registration of partnership firms is optional and is entirely at the discretion of the partners. The Partners may or may not register their Partnership Agreement. However, in the case where the partnership deed is not registered, the partners may not be able to enjoy the benefits which a registered partnership firm enjoys.
- Registration of a partnership firm may be done before starting the business or anytime during the continuance of partnership. However, where the firm intends to file a case in the court to enforce rights arising from the contract, the registration should be done before filing the case.
The procedure for registration of a partnership firm in India is fairly simple. An application and the prescribed fees are required to be submitted to the Registrar of Firms of the State in which the firm is situated. The following documents are also required to be submitted along with the application:
- Application for Registration of Partnership in Form No. 1
- Duly filled specimen of Affidavit
- Certified True Copy of the Partnership Deed
- Ownership proof of the principal place of business or rental/lease agreement thereof.
Sign the application.
The application or statement must be signed by all the partners, or by their agents especially authorised in this behalf.
Expect the registration process to proceed formally.
When the registrar is satisfied with the points stated in the partnership deed, he or she shall record an entry of the statement in a register called the Register of Firms and issue a Certificate of Registration. The Register of Firms maintained at the office of the Registrar contains complete and up-to-date information about each registered firm.
- This Register of Firms is open to inspection by any person on payment of the prescribed fees; any person interested in viewing the details of any firm can request the Registrar of Firms for the same and on payment of the prescribed fees, a copy of all details of the firm registered with the Registrar will be given to the applicant.
Be registered for tax.
It should be noted that registration with the Registrar of Firms is different from registration with the Income Taxation Department. It is mandatory for all firms to apply for registration with the Income Tax Department and have a PAN Card. After obtaining a PAN Card, the partnership firm is required to open a Current Account in the name of the partnership firm and to operate all its operations through this bank account.
Formation of an NGO as Co-operative Society
A Trust can register as a private trust or a public charitable trust. The Indian Trusts Act recognizes private trusts. Private trust can be registered for managing private assets of an organization like a school, college or institution.
Private trusts are not allowed for tax benefits by the income tax department. If you are willing to do some charitable work for public, you can register a public charitable trust. India does not have a national level law to govern charitable trusts.
A Registered NGO under trust act. has the following advantages
- A registered Trust Deed becomes an official shape of an NGO which carries support and recognition of law.
- A conveyance of trust property to the trustee under a registered deed is ordinarily not open to challenge.
- In the case of a charitable or religious trust, For Availing benefits under Section 11 of the Income Tax in the case of immovable property registration, it is essential that the instrument of trust is duly registered.
- A trust registered in Delhi can open several branches in all over India.
Registration of a Trust
Registration of a Trust is required
- Registration under state Act.
- Registration under Income Tax Act.
Registration Process in NCT of Delhi
- Founder/Settler have to come to Delhi for presentation in the registrar office.
- Fulfilling mandatory position like the President, Vice-President, Secretary, Treasurer, etc.
- For national level trust registration, it is mandatory that the concerned person should have a copy utility bill of Delhi.
- Aadhar card is necessary for trust formation in Delhi.
- Minimum two witnesses of Delhi are essential who should have Aadhar card.
- Two photographs of each of the members are the required documents.
Minimum requirement at time of registration
From All Members
- PAN Card
- Latest Bank Statement/Telephone or Mobile Bill
- Voter’s ID/Passport/Driver’s License
- Passport-sized photograph of all directors and shareholder
For Proposed Registered office (Residential or commercial)
- Any Utility bills
- Scan copy of Rent agreement with NOC from owner
Patent vs Copyright vs Trademark
Patent, copyright and trademark are all types of intellectual property rights that provide the creator an exclusive right over the use of his/her creation of mind for a limited amount of time. Entrepreneurs who are seeking to register intellectual property must know the differences between the three and obtain the right registrations to protect his/her intellectual property. In this article, we look at the differences between patent, copyright and trademark in India.
What is Patent?
Patent is an exclusive right for an invention provided by the law for a limited time to the Patentee. By patenting an invention, the patentee is able to control the making, using, selling or importing of the patented product or process for producing that product without his/her consent. An invention relating either to a product or process that is new, involving inventive step and capable of industrial application can be patented in India.
What is Copyright?
Copyright is a right given by the law to creators of literary, dramatic, musical and artistic works and producers of cinematograph films and sound recordings. Copyright does not protect brands or names, short word combinations, slogans, short phrases, methods, plots or factual information. Copyright also does not protect ideas or concepts. Therefore, copyright is mainly used to protect the creativity of writers, artists, designers, dramatists, musicians, architects and producers of sound recordings, cinematograph films and computer software.
What is Trademark?
Trademark is a visual symbol which may be a word signature, name, device, label, numerals or combination of colours used by one Enterprise on goods or services or other articles of commerce to distinguish it from other similar goods or services originating from a different undertaking. Hence, trademarks are mostly used to protect brand names, business names, slogans and more.
Difference between Patent, Copyright and Trademark
Patent, Copyright and Trademark serve different and distinct uses. The validity of their life and requirement for application also vary as follows:
Patent: Patents are mainly used to secure invention relating either to a product or process that is new which is capable of having industrial application. Softwares and business ideas cannot be patented in India.
The following are items NOT patentable in India as per Section 3 of the Patent Act, 1970:
- An invention which is frivolous or which claims anything obviously contrary to well established natural laws;
- An invention the primary or intended use or commercial exploitation of which could be contrary to public order or morality or which causes serious prejudice to human, animal or plant life or health or to the environment;
- The mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living thing or non-living substance occurring in nature;
- The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.
- A substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance;
- The mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way;
- A method of agriculture or horticulture;
- Any process for the medicinal, surgical, curative, prophylactic diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products.
- Plants and animals in whole or any part thereof other than micro organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals;
- A mathematical or business method or a computer programme per se or algorithms;
- A literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions;
- A mere scheme or rule or method of performing mental act or method of playing game;
- A presentation of information;
- Topography of integrated circuits;
- An invention which in effect, is traditional knowledge or which is an aggregation or duplication of known properties of traditionally known component or components.
Copyright: Copyright is mainly used to secure literary, dramatic, musical and artistic works including cinematograph films and sound recordings. A software or programme or tables and databases can be registered as a ‘literary work’ under the Copyright Act. However to obtain a copyright for the software, the source code for the software must be submitted to the Copyright Office along with the application.
Trademark: Trademarks are mostly used by individuals, commercial and non-commercial entities to protect brand names, business names, slogans and more. An idea or concept or software cannot be trademarked. However, a unique name given to a software or idea or concept can be trademarked.
The review and acceptance of patent and trademark applications are controlled by the Controller General of Patents, Designs and Trademarks, Ministry of Commerce and Industry. The review and acceptance of Copyright applications is controlled by the Copyright Office, Department of Higher Education, Ministry of Human Resource Development.
Patent: Patent registrations have a validity of 20 years from the date of filing of patent application, irrespective of whether it is filed with provisional or complete specification. In case the Patent Application is filed under the However, in case of international patent applications filed under PCT, the validity of the patent is for a term of 20 years beginning from date of international filing.
Copyright: The general rule is that copyright lasts for 60 years. In the case of original literary, dramatic, musical and artistic works the 60-year period is counted from the year following the death of the author. In the case of cinematograph films, sound recordings, photographs, posthumous publications, anonymous and pseudonymous publications, works of government and works of international organisations, the 60-year period is counted from the date of publication.
Trademark: Trademark registrations are valid for a period of 10 year from date of application. A registered trademark’s validity can be extended at the end of ten years by filing a trademark renewal application.
|What’s Protected?||Original works of authorship, such as books, articles, songs, photographs, sculptures, choreography, sound recordings, motion pictures, and other works||Inventions, such as processes, machines, manufactures, compositions of matter as well as improvements to these||Any word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others|
|Requirements to be Protected||A work must be original, creative and fixed in a tangible medium||An invention must be new, useful and nonobvious||A mark must be distinctive (i.e., that is, it must be capable of identifying the source of a particular good)|
|Term of Protection||Author’s life plus 70 more years.||20 years||For as long as the mark is used in commerce|
|Rights Granted||Right to control the reproduction, making of derivative works, distribution and public performance and display of the copyrighted works||Right to prevent others from making, selling using or importing the patented invention||Right to use the mark and to prevent others from using similar marks in a way that would cause a likelihood-of-confusion about the origin of the goods or services.|