Partnership firm registration is a way to establish a partnership business entity that has more risks than it has rewards. From unlimited liability to more income taxes, most aspects of this business entity work against those who incorporate it. However, there are many lessons that you can draw from this infrastructure.
Partnership Firm Registration is the gift from the Partnership Act that came into existence in 1932. Since then, the government made no effort to make changes to this business entity. As a result, everything from the process of incorporating it to how it has to pay the taxes remains the same as they were before.
However, there are still those who consider this business infrastructure as a holy grail. Partnership registration for them is a way to learn about the business the hard way. Needless to say, many only incorporate it for the sake of learning a few things.
What are those parables? Let us discuss.
The partnership registration process teaches you about the offline process to incorporate a business
As we have already stated, nothing has changed when it comes to the process of incorporating a partnership firm. It is still under the governance of the state government and still requires an offline process.
The ancient procedure will make you fill the hardcopy of the application form and submit it to the Registrar of partnership. If he encounters any issues, you receive a letter directing you to fix them. If you don’t, the Registrar abandons the application. But if you do, there is no chance that he will accept your registration request.
The to and fro that you will have to endure between you and the Registrar will give you a taste of this business entity.
Getting the Partnership registration certificate teaches you how to cooperate in a natural environment
A partnership firm is a non-legal business entity. The only government oversight that you will have to endure once you incorporate it is the GST registration. And, even that would happen if your revenue crosses a certain threshold. Do you want what that means?
Simply put, it means that you have no one to watch over you and your partners. It will force them to do business and cooperate in a natural environment. Every business decision that you will make will depend upon the integrity that you and your partners possess, not because some regulation says so. You do not have a safety net to fall back on. And even the partnership deed registration is nothing more than a document that gives guidelines.
Related Service: LLP Registration
You will learn the value of trust or the lack of it
Once you get under the pressure to cooperate with one another, you learn the value of trust. In a partnership firm, the regulation state that in your absence, your partners can make the decision on your behalf. It is due to a vacuum that exists within a partnership firm because of the lack of a central authority.
It will force you to put your trust in your partners. And you will end having to put the fate of your business on the faith that you have in your co-founders.
It will teach you how to resolve disputes properly
Getting the partnership firm registration certificate is like getting access to a weapon with many triggers – each in the hand of the partners of the firm. Even though the partnership deed attempts to add a sense of integrity within the firm by highlighting the regulations, in the end, whether or not you fight among yourselves is a decision that depends upon you.
You have to tread lightly because one wrong step would mean the end of your partnership.
You will learn about unlimited liability
Your partners and you are not separate from the partnership firm you operate. Its loss is your loss and its winnings are your profits. It creates a phenomenon of unlimited liability where you realize that every professional decision you make will impact your personal finances. Simply put, running a partnership is akin to walking on a tight rope.
If you are too demanding, the weight of your demands will break your partnership.
If you fail to deal with the losses property, the loss of balance will spell the end for your business.
Final words
The lessons that you gain from running a partnership firm will prepare you to face the real business world. So, when deciding to register a partnership, know that a lot of hard lessons await you. If you learn them well, prosperity will be yours. If you don’t, no one will remember your enterprise.
Therefore, only undertake partnership firm to learn, not to do business. If you start this firm with hopes to start a successful business, how long do you think you would survive in this untrustworthy era?
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