Founders Recharge Station: Important Lessons to know before Partnership Firm Registration

Business partnerships play an important role in the success of new ventures.  Maintaining partnerships is a task since factors like ego, money, disagreements can lead to a fallout.

We have put forward some points you should be following before you go for partnership registration.

1. Choose partner cautiously

Partnerships are dependent on two or more individuals working together for making profits in a business. If one of them disagrees with the other, it can harm the business. Hence, it’s best to choose your partner cautiously.

2.  Partnership Registration is highly recommended

 It is recommended to create a balanced Partnership Agreement for partners. Here are some of the benefits of Partnership Firm Registration.

  • It gives partners the ability to file a case against third parties, and other partners and grants power to claim set off against any third-party claim.
  • It’s easier and faster to convert into any other business structure if the partnership is registered

The following are the essentials of a balanced and a well-drafted deed:

  • Partnership Name: Preferably, it should be unique to have distinct recognition in the target market
  • Partners’ contributions can be in form of Property, Services, or Cash. Their valuation as well as what ownership percentages the partners would have should be mentioned.
  •  Details about the divisions of profit and loss allocation should be clearly mentioned.
  • The deed should also include if any decision requires a majority vote or a unanimous consent among partners.
  •  Duties amongst the members along with an individual’s responsibilities should be clearly mentioned in an ideal deed.
  • A well-drafted deed should include details on how to bring in new partners on board. 

3.  Look into LLP registration

Limited Liability Partnership is an ideal option to create a more secure structure than the general partnership. It keeps the liabilities among the partners limited.

 LLP registration has the following benefits

  • Liability protection: One partner would not be held liable for the actions of the other
  • LLP gets extra benefits and tax advantages while other requirements remain the same as the general partnership
  • It allows an LLP to own assets in its own name
  • Exit or death of partners does not affect the LLP
  •  Raising funds from financial institutions becomes easy. So the risk is less in LLP

4.   Capital distribution for successful running of business

Capital distribution ensures the running of every business success. One can make capital contributions at any stage of the partnership firm registration.

The Capital clause should clearly specify:

  • Partners initial contribution to the firm
  • Any modification in the capital amount
  • In case of no contribution from any partner, the deed should specify that too

The partnership agreement must include the asset valuation as contributed by each partner. This makes dissolution easier by dividing the share between the partners. 

5. Organize an exit strategy

The partnership agreement should have a specific exit plan. It should define the procedure, details about the distribution of profits, and the firms’ exit strategy. 

An exit strategy should be such that it allows you or your partner to move away from the partnership, or that provides options to buy out the other party.


 Partnerships are great to start out with. But as one grows many other business structures can be opted for according to one’s suitability.

Stay tuned with Earlypad for more such updates!

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