Advantages and Importance of Registration of a Firm
(A) Legal advantages.
(B) General advantages.
1. Legal Advantages
i Settlement of Claims
Registered firms can file suit against the third parties. So the rights of registered firms are safe guarded by law. But an un-registered firm or its partner cannot enforce its claim against the third parties or its co-partner.
ii Protection of Rights
The rights and privileges of new partner are also protected in registered firm. But if incoming partner fails to register himself, he will incur great risk, because he will not be in a position to file suit for his dues against his firm or his co-partners.
iii Protection of Property
The property of the retired of deceased partner continues to be liable for the acts firm does after his death or retirement until public notice is served for the change to registrar, So there is strong inducement for partners of registered firms to have the changes noted in the register. But if there is unregistered firm, the private propel1y of the out-going partner will be considered liable to charge the debts inspite of retirement.
iv Protection to Creditors
Registered firm has to maintain correct, complete and upto date record of its partners who will be liable for the obligations of the firm. The statement recorded in the register regarding constitution of firm would afford a strong safeguard against untrue refusal of partnership and the evasion of liability to persons who want to deal with the firm.
- GENERAL DISADVANTAGES
i Government Facilities
Government provided many facilities and privileges to registered firms. It gives protection to business and production, which makes it more profitable.
ii Public Confidence
People have more confidence in the registered firms than in unregistered firms, because they think that these firms are working under the supervision of the government and there are no chances of fraud or misrepresentation on behalf of registered firms. Thus they make business contracts with them without any fear.
iii Credit Facilities
Banks and other financial institutions provide credit to registered firms without any hesitation. As these firms abide by the government rules and regulations, so they have full trust in them.
iv Legal Protection
Registered firms have full legal protection as compared with unregistered firms. As they work strictly in accordance with the government rules and regulations so they have no fear from government to turn their work illegal. Thus these firms work with liberty without any fear.
v Business Reputation
Registration adds to reputation. Other firms cannot copy their products. Such firms use their trade marks which are registered and no other firm Registered or non registered can use this trade mark. These firms advertise only their trade mark but not products.
When people find a product up to their standard they note its trade mark. This makes the firm's business more profitable.