What is a Partnership Deed? How to Download Partnership Deed Format?

Starting a partnership is one of the most popular ways to start a new business in India. In order to start a partnership firm, you need at least two partners. If you want to establish a partnership firm, you need a partnership firm with the partners of the firm. A partnership deed is like an agreement that is done between the partners of a firm. This agreement contains all the terms and conditions of the partnership between the partners.

A partnership deed is also referred to as a partnership agreement. A partnership deed is a legal document that is signed by the partners who decide to come together and run a business in order to gain profit. The partnership is an efficient way of resolving any sort of issues or disagreements between the partners related to the norms of partnership. The main purpose of a partnership deed is to maintain a clear understanding of the roles of various partners in the firm in order to ensure that the partnership firm runs smoothly.

A partnership deed consists of different types of terms like salaries, interests on capital,drawings, profit and loss sharings, addition of a new partner, etc which helps in bringing clarity to the partners.

Why is a partnership deed important?

The importance of a partnership has been listed in the following points:

• It helps in defining the terms of relationship with the partners.
• It helps in the regulation of rights, duties and liabilities of all the partners.
• It avoids any sort of misunderstanding that arises between the partners.
• It helps in settling a dispute among the members according to the terms mentioned in the partnership deed.
• To avoid any confusion between the partners about the sharing of profits and losses.
• It clarifies the role of every partner.
• It clarifies any confusion about the remuneration that will be paid to the partners.
• It helps in the smooth functioning of the partnership firm since all the terms and conditions are written in the form.

Different types of Partnership Deeds

A partnership deed may be of the following types:

• A General Partnership Deed: A General Partnership deed consists of the terms and conditions under which every partner will share equal responsibility for managing the firm and will be liable jointly for all the debts and obligations.
• A Limited Partnership Deed: A limited liability partnership is between general and limited partners. It establishes a limited partnership where the general partners have unlimited liability for the debts or obligations of the firm while the limited partners have only limited liability and do not have to actively take part in the managing of the firm business.

Constituents of  Partnership Deed

A partnership deed consists of the following details:

• Name of the firm
• Details of the partners
• Business of the firm
• Duration of the firm
• Place of Business
• Contribution of Capital
• Profit/Loss sharing
• Commission and Salary
• Drawings of the Partner
• Loan of the Partner
• Obligations and duties of the partner
• Admission, death and retirement of the partner
• Accounts and Audits.

How to get a partnership deed?

A partnership deed can either be oral or written as per the convenience. But it is suggested to have the partnership deed drafted on a paper in order to avoid any sort of conflicts or disputes. A written partnership deed is also beneficial for taxation purposes and for the registration of firms. It can be drafted by all the partners when they have arrived at a mutual agreement related to the clauses of the deed. A legal professional can also draft it.

Some important points that everyone should know before drafting a partnership deed are as follows:

• The deed will contain the clauses for the partnership firm.
• The deed will be formed with at least two or more partners.
• The deed will be drafted after a mutual agreement between partners.
• The deed will contain clarified clauses in detail. No ambiguous information should be present in the partnership deed.
• It will be printed on an e-stamp paper that may cost Rs. 200 or more.
• The deed will have to be signed by all the partners on all the pages.

Documents needed for the registration of a partnership deed

The following documents are required for the registration of a partnership deed between partners:

• Address Proof of the partnership firm
• PAN of all the partners
• Address proof of all the partners(either a Voter ID or an Aadhar Card or a Driving Licence, etc)

How to register your partnership deed?

According to the government, a partnership deed is registered under the Indian Registration Act which was passed in 1908. A partnership needs to be printed on a non-judicial stamp paper whose value may be Rs. 200 or more, on the basis of the capital of the firm. A partnership firm will have to be signed by all the partners of the partnership firm and each partner must possess a copy of it.

Once the deed has been signed by all the partners, it needs to be registered with either the registrar or the sub-registrar of the respective jurisdiction. The stamp duty for the registration of a partnership varies from one state to another state. The stamp duty of the respective state is decided by the Stamp Act of that state and is to be paid to the Sub-Registrar while registering. The registration of the partnership makes it lawfully valid.