Step by Step Process of Partnership Firm Registration in India - Jordensky

Step by Step Process of Partnership Firm Registration in India. Partnership firm is governed by The Indian Partnership Act (1932)

Step by Step Process of Partnership Firm Registration in India - Jordensky

Step by Step Process to register Partnership Firm in India

In simple terms, partnership refers to two or more people working together to complete a task. The Indian Partnership Act (1932), which will be referred to as the Act moving forward, defines partnership in terms of India's corporate structure as "the relationship between two or more persons who have agreed to share the profits of a business carried on by all or any of them acting for all." In a private business, a person's competence, expertise, and capital are limited, in addition to potential liability at any time.

A partnership deed, which must be a written instrument properly signed by all of the partners, governs a partnership. The deed satisfies the need of disclosing information about the firm, including name, partners' information, business kind, location, and others. There is no minimum capital requirement under the Act, therefore two or more people can create a partnership firm without too much effort in building up a minimum capital.

How to Register a Partnership Firm in India?

Governmental organizations are now able to conduct operations like registration and compliance online because to the growing usage of technology. In India, a few states have adopted the online registration method, which calls for the application to be lodged with the Register of Firms, even though many states still follow an offline procedure (ROF).

To file for a Partnership Firm under the Act, just follow these easy procedures.

Step 1: Choose name for a partnership

A company should choose a name that is distinct from any name or colorable replica of an existing, well-known entity. The name of the partnership should not be the same as or nearly the same as that of an existing business. On the website of the Ministry of Corporate Affairs, the applicant may verify the legality of his or her selected name.

Step 2: Draft a Partnership Deed

The partnership deed is the key document for the company's registration because it gives the registrar the information needed to complete the following tasks:

  • Name and address of company and all partners
  • Contact details of partners
  • Nature of the business
  • Duration of the partnership
  • Profit/Loss sharing ratio
  • Rules regarding the solvency of the firm
  • Information of capital to be contributed by each partner
  • The Deed also specifies the obligations of the Partners, the Audit Procedures, and the Compensation due to Partners in excess of Profit Shares.

Step 3: Apply for a PAN Card in the Partnership Name

A firm must apply for a Permanent Account Number at the Income Tax Department, regardless of whether it has been registered under the Act. On the basis of a current account held in the company's name, this may be applied. The PAN is necessary to meet the taxpayment obligation.

Step 4: File a Registration Application

A firm must provide information in the registration application regarding the name of the firm, the type of business it conducts, its address, the names and addresses of all of its partners, and the date the business first opened. This paperwork is then delivered to the local registrar near the company's main office.

Step 5: Submit the Documents

The following papers must be delivered to the Registrar with the registration application as part of the registration process:

  • Application for registration of partnership (Form 1)
  • A certified original copy of partnership deed
  • Specimen of Affidavit
  • PAN Card in the name of partnership firm
  • Proof of address of the partnership firm, ownership deed, lease and rent agreements, etc. are common acceptable documents
  • PAN Cards and address proofs of all the partners

Step 6: Pay the Fees & Stamp duties

When submitting the paperwork to the Registrar, a registration fee and stamp duty must be paid. States have different fees. It is important to realize that registration isn't complete until all fees have been paid.

Step 7: Finalize the Deed

The Deed must be given to each partner in writing on legal paper to make it enforceable. Each partner must properly sign one stamp paper deed in front of the notary. Each state sets its own price for the stamp. Following that, the signed copy is delivered to the Registrar as part of the registration procedure.

Step 8: Certification from the Registrar

After carefully reviewing the materials, the registrar will issue a registration certificate.

As a result, the company will be included in the Register of Firms. The company shall be assumed to be registered as of the date of this entry. After its name, the partnership firm must write "(Registered)" as of the registration date.

Today, it is possible to register partnership firms online in several Indian states. The firm must submit an online application in order to register their partnership. The business must fill out this form with the same data. The firm is required to upload scanned copies of all the aforementioned papers after logging in to the website using the acknowledgement number generated after the application was submitted. The certificate will be provided via email after the registrar has reviewed the paperwork.

Documents Required
  • Duly filled application form with passport-sized photographs
  • Identity and Address proofs of partners
  • PAN card and address proof of partnership firm (NOC from owner if property is rented)
  • Partnership Registration Certificate
  • Any registration document issued by state or central government, such as GST Registration
  • Any other document required by the respective authority
Also, Read About

What is the difference between Partnership Firm and LLP?

Below mentioned are the major differences between a Partnership firm and LLP:

Difference betweenpartnership firm and LLP
Difference between partnership firm and LLP

Various Types of Partners in Partnership Firms in India

  • Active or Working Partner
  • Based on Partnership Registration Status
  • Dormant or Sleeping Partners
  • General Partnership
  • Limited Liability Partnership(LLP)
  • Nominal Partner
  • Partner by estoppel or holding out
  • Partner in profits only

Key Features of a Partnership Firm

The characteristics of a partnership firm make it appropriate for small and medium-sized organizations.

Among the essential characteristics of a partnership firm are:

  • According to the Companies Act of 2013, a partnership firm may have a minimum of two and a maximum of one hundred members.
  • Additionally, a registered business must add "(Registered)" following the corporate name.
  • Having more employees frequently results in the integration of specialized skills and competencies that could support quick expansion.
  • Except in cases where the kind of partnership is a Limited Liability Partnership, a partnership firm, unlike a company, lacks a distinct legal entity.
  • A Limited Liability Partnership (LLP) lifts this restriction and places restrictions on a partner's obligations, as opposed to a partnership firm where each partner has unlimited liability.
  • Starting a partnership firm has no minimum capital requirements.
  • A partner cannot transfer the partnership's revenues or rights without the agreement of the other partners.
  • Third parties may file a lawsuit against a partnership firm to enforce their claim whether it is registered or not under the Act.
  • When a registered business applies for capital or working capital loans from banks, it has an advantage because it is required to comply with legal and tax requirements.

Benefits of Registration as a Partnership firm in India

When compared to a proprietary business, a partnership firm has the advantage of fostering greater skill, capital, and risk sharing. When compared to a company, it has the advantage of simple procedures and minimal compliance, which makes partnership an attractive option for small and medium-sized businesses. Its main advantages include:

  • Unlike an individual in a proprietary firm, whose liability may be unlimited, participants in a partnership firm profit from risk pooling.
  • The ability for a partner to sue the other partners in the event of disagreements between or among the partners is the registration's primary advantage.
  • Additionally, registration gives the Partnership company the ability to bring legal action against third parties to enforce its rights.
  • A registered partnership firm can be dissolved using a rapid and reliable process.
  • The first thing the court determines in legal issues is whether the incorporation is registered. It is therefore recommended to have the partnership registered with the Act.

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