How to build Partnership for your business?

One of the key advantages of starting your business is the option to choose your partners and collaborators. For the optimal growth of any business, the right partnership is crucial. Businessmen and traders, since times immemorial, have made use of strategic partnerships to grow their businesses. By increasing the lease of knowledge and expertise, partnerships help reach a wider audience while bettering the product or service.

Some of the vital advantages of Partnerships include:

Low start-up costs
Availability of more capital
More borrowing capacity
Sharing the labour
More business opportunities
Brings in a new perspective

Partnerships come in all shapes and sizes. From one organisation choosing to invest in another, to two organisations teaming up, partnerships are diversified. However, the aim of each partnership is more growth and development.

But it’s vital to choose the right partners, as running a business isn’t as smooth sailing as it sounds. Just like relationships in our lives, business partnerships also run into rough waters. So if you want to ensure that your partnerships stay on course, here are some tips.

1. Clearly defining roles and responsibilities

For a partnership to work in the long run, each partner needs to do what’s expected of them. That’s why clearly defining roles and responsibilities is of utmost importance. It’d help in eliminating disagreements by proving each partner control over his or her domain. Additionally, employees and customers would also benefit from knowing which individual handles what area.

2. Written Agreement

Another essential thing to do before you get into a partnership is to put the terms and conditions in writing. By drawing up legal documents about your business structure, capital contribution, decision making, and dispute settlement, you’d bring in efficiency and security to your business. If difficulties arise, this agreement will assist you in handling them.

3. Communicating

Prioritising communication is extremely important in any form of business. Partners must feel comfortable expressing their viewpoints and deliver criticism. Additionally, they must be willing to have difficult conversations. Having meetings and standing calls every week is vital for providing a dedicated space to address the topics that may get overlooked.

4. Selecting the right business structure

There are numerous kinds of partnerships that can be selected. From a general partnership, limited liability partnership, to a limited partnership, the options are plenty. But it’s essential to pick the business structure as per your needs. So before going ahead with a business structure, you must analyse the advantages and limitations of taxes, continuity, and liability. Experienced advisors and attorneys can also be consulted while selecting.

5. Making sure that the brands align

Before entering into a partnership with another company, make sure that the visions and values of both the brands align.

Your partner must believe in what you trust, and vice versa. They must be willing to uphold the same standards, and be willing to share the same long-term purpose as yours.

6. Admitting mistakes

An essential thing to do in a partnership is to admit your mistake. The moment you feel that a decision of yours did not pay off, it’s important to apologise. By acknowledging your mistake, your partners would appreciate not having to call you out, and you’ll be able to move on quickly.

7. Collaboration

Even after defining the roles and responsibilities, it’s necessary to collaborate. Partners should take a proactive role in identifying and solving problems. It’s vital to bring useful ideas and expertise to the table.

Process of registering and forming a Partnership

As per the Partnership Act 1932, ‘Partnership is a relationship between two or more people who’ve agreed to share profits and losses in a business carried on by all or any one of them acting for all.’

A new partner can only be added by the consent of all the other partners. An individual who’s a minor cannot be a partner. If a partner wants to retire, he needs to take the permission or consent of all the other partners.

Here is the process of forming a partnership.

1. Choosing a name

The foremost step for setting up a partnership is choosing a name. Although it might seem easy, numerous aspects must be considered before finalising a name. Individuals must make sure that they’re not violating the trademark rights of other businesses. It’s super easy to do a name search in today’s day and age to check available names. The name of your business is a vital piece of information and is difficult to change. That is why one must do ample research before choosing a name.

2. Drafting a partnership deed

One of the most important documents required for the registration of a business is the partnership deed. It provides the registrar with vital information, like -

Name and address of the company and partners
Contact information of the partners
Nature of the partnership business
Duration of the business
The ratio in which profits/losses will be shared
Rules and regulations regarding the insolvency of the partnership firm
Details regarding capital to be contributed by each partner
Remuneration to be paid to the partners in excess to the profits shared
Responsibilities of the partners
Audit procedures to be followed

3. Applying for a PAN card

Once the partnership deed has been drafted, the partners must apply for a PAN (Permanent Account Number) card in the partnership name with the income tax department. You can apply for a PAN on a current account basis. The PAN card is an obligation that must get met due to tax purposes.

4. Filing a registration application

The registration application provided by a partnership firm contains details regarding the name and address of the company, nature of the business to be carried out, names and addresses of all the partners, and date of commencement of the business. This application is taken to the registrar in the region of the partnership firm’s head office.

5. Submitting the essential documents

While submitting the registration form to the registrar, it’s also essential to submit some necessary documents. Some of them include:

A certified copy of the partnership deed
PAN card of the partnership firm
Specimen of affidavit
PAN cards and proof of address of all the partners
Lease and Rent agreements
Ownership deed

6. Paying the fees

At the time of submitting the documents, a registration fee and stamp duties need to be paid. The registration fee to be paid varies across states. Until all the dues are paid, registration doesn’t get completed.

7. Finalising the Deed

The deed only gets finalised once all the partners receive it in a written form on a stamp paper. All the partners need to sign one stamp paper deed in front of the notary.

The signed copy is then submitted to the registrar during the process of registration.

8. Receiving certification from the registrar

After thoroughly analysing the application and documents submitted by the partners, the registrar issues a registration certificate. Once that happens, the partnership firm would appear in the records and is deemed to be registered. Afterwards, the firm is required to add ‘registered’ after its name.

Numerous states across India also provide online registration. It involves submitting the registration application along with the necessary documents online. After presenting the documents, an acknowledgement number is raised. It can be used to login on the website. The registrar sends the certificate via email in this case.

Bottom Line

Before entering into a partnership, it’s vital to do thorough research about the other party. Devote some time to planning before execution. Strong partnerships are built on trust and respect. So make sure to respect one another’s personalities and abilities.

The corporate goals of the other brand should also augment your own. Clearly defining roles, and having a written agreement is a must. Like any other relationship, partnerships are also about finding a partner you can trust and grow with in life.

Also read:

1) Business Success Tips Every Business Owner Should Know
2) What are the best businesses in India to start from home?
3) Green Business Ideas for Startup Entrepreneurs
4) Top-5 Startup & Business Ideas for Indian villages