If registration is optional, why do partnership firms willingly go through this legal formality and get themselves registered? Explain.



Q.5:- If registration is optional, why do partnership firms willingly go through this legal formality and get themselves registered? Explain.

 

Answer:-



Registration of partnership firm means recording of the firm’s name and its relevant prescribed particulars, in the Register of firms kept with the Registrar of firms. It provides conclusive proof of the existence of a partnership firm. It is optional for a partnership firm to get registered still most of the partnership firms voluntarily get themselves registered as in case of non-registration, the firm has to face the following consequences (i) A partner of an unregistered firm cannot file a suit against the firm or other partners. (ii) The firm cannot file a suit against third parties. (iii) The firm cannot file a case against the partners. Hence, to avoid these disadvantages, partnership firms register themselves.