Partnership Firm Registration

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OVERVIEW

What is Partnership Firm?

Partnership firm represents a business entity that is formed with a purpose of making a profit from the business. Two or more parties come together with a formal agreement (known as Partnership Deed) to own and manage the business. The risk and responsibilities are shared amongst the partners that shred the burden of an individual partner. Also, when two comes together, more capital and expertise are combined that helps to reach the business goal(s) easily.

Partnership Act, 1932 defines the structure of a Partnership firm by providing all the necessary provisions to run the same. The Act validates both registered and unregistered partnership firms in India. However, an unregistered partnership has few shortcomings that attract partners towards Partnership Firm Registration. But, one can overcome it by registration firm anytime after it is formed.

BENEFITS

Benefits of Partnership Firm

Shared Responsibilities

The word Partnership itself describes individuals coming together for some common business object. The partners share the responsibility to work and manage the business together. Responsibilities for a particular field or task can be assigned to one or more partners by indicating the same in a Partnership Deed.

Operating Flexibility

A Partnership firm is operated on the basis of the Partnership deed executed by the partners, mutually. The partners can decide how to operate the business with their mutual consent. Also, the Partnership Deed can be changed according to the requirement even after partnership deed registration is completed. There are no limitations or restrictions on the partners in regards to running the business, as long as it is covered under the signed agreement.

Pre-defined Object or Period

At the time of registering a Partnership firm, the deed enumerates the pre-defined business objectives and activities, which is the main aim to commence business. A partnership can be formed within a specified period or to complete a specific project or object. Once the same is completed, the partnership will automatically stand dissolved.

Various Financial Returns to the Partners

Partners involved with the firm get various types of returns for their capital as well as their individual efforts. The working partner also receives remuneration in addition to the interest on capital and share of profit, as may be agreed by the partners. Also, the share of profit from partnership firm is exempt for the partner receiving it.

ONLINE REGISTRATION

Documents required for formation of a Partnership Firm

PAN Card

A self-attested copy of PAN Card of all partners

Partners Address Proof

Self- attested copy of Aadhar Card and Voter ID/ Passport/ Driving License of all partners

Business Address Proof

Utility Bill (Electricity Bill) of the place of business

Rent Agreement

Rent Agreement and NOC from the owner of the place of business, if rented

How to choose a name?

Unique Name

A unique name helps to recognise the Partnership distinctly and build brand value

Business Object

A part of name should suggest the business activity of the firm

Short and Simple

The name should not be unnecessarily long and should be simple to spell and remember.

Learn More

Online Registration

Establish Partnership in 3 Easy Steps

1. Answer Quick Questions

Pick a Package that best fits your requirements
Fill in our questionnaires that take less than 10 minutes
Provide basic details & documents required for registration
Make payment through secured payment gateways

2. Experts are Here to Help

Assigned Relationship Manager
Drafting a Partnership Deed
Payment of Stamp Duty on Deed
Notary of Partnership Deed
Application for PAN and TAN

3. Establishing a Partnership Firm

All it takes is 12 working days*

*Subject to Government processing time

The Process

Process to establish Partnership Firm

Day 1

Discussion and collection of basic Information
Providing Required Documents for Partnership firm registration

Day 2 - 4

Drafting a Partnership Deed
Review and confirmation from Partners

Day 5 - 7

Payment of Stamp Duty on the agreement
Partnership Deed Notarisation
Application for allotment of PAN and TAN

Day 8 onwards

Partnership Deed registration, if subscribed
Certificate of Registration from RoF*

Compare Related Services

Compare different business structures to choose the right entity type

	Private Limited Company	One Person Company	Limited Liability Partnership	Partnership Firm	Proprietorship Firm
Applicable Law	Companies Act, 2013	Companies Act, 2013	Limited Liability Partnership Act, 2008	Indian Partnership Act, 1932	No specified Act
Registration	Mandatory	Mandatory	Mandatory	Optional	No
	PLC must be registered with MCA under the Companies Act	Same as Private Limited Company	LLP must be registered with MCA under the LLP Act	Partnerships can be registerd or Unregistered, there are obvious benefits to register with the State ROF	No registration required. Registration under MSME or GST act are considered valid for Proprietor Firms
Number of Owners	2 – 200	Only 1	2 – Unlimited	2 – 50	Only 1
	Minimum of 2 to maximum of 200 shareholders excluding present or former employees who are members	Only one shareholder	Minimum 2 Designated Partners are required. No limit on the number of maximum partners	Minimum 2 partners, and maximum 50 partners	The proprietor can be the only owner of the firm
Separate Legal Entity	Yes	Yes	Yes	No	No
	PLC is a separate legal entity, and can enter into contracts or own assets in it’s own name	Same as Private Limited Comapany	Same as Private Limited Comapany	Partnership firm does not have any separate identity from its partners	Proprietor and business are the same, and hold same PAN number
Liability Protection	Limited	Limited	Limited	Unlimited	Unlimited
	Limited to the share capital subscribed (may vary if defined as limited by guarantee or unlimited liability in the MOA)	Same as Private Limited Company	Limited to the capital contribution agreed by the partner in the LLP Agreement	Partners are jointly and severally liable to pay the debts of the Partnership Firm	Paying off the liabilities of the firm is the proprietor’s responsibility
Statutory Audit	Mandatory	Mandatory	Based On Applicability	Not Mandatory	Not Mandatory
	Required to appoint a statutory auditor within 30 days of company incorporation	Same as Private Limited Company	Statutory audit required when turnover exceeds INR 40 Lac or contribution exceeds INR 25 Lac	No statutory audit required. Tax audit applicable on basis of total turnover	Same as Partnership Firm
Ownership Transferability	Yes	Yes (Restricted)	Yes	Yes (Restricted)	No
	Shares are easily transferable, so it makes it a most preferred option for raising capital through external investors	There is only one owner in OPC. 100% shares need to be tranferred to change ownership	Ownership can be changed with consent of other partners, by drafting a supplementary agreement	Ownership is not easily transferable. Partnership deed outlines the restriction for transfer of ownership	Ownership of the proprietorship is not transferable
Perpetual Existence	Yes	Yes	Yes	No	No
	Private Company prevails with change in ownership or management	OPC has a perpetual succession, but can only have one owner at any time	Change in Partners or Designated Partners does not affect the existence of an LLP	Change in partner leads to dissolution or formation of another partnership firm	Death or insolvency of proprietor dissolves the business
Foreign Ownership	Allowed	Not Allowed	Allowed	Allowed	Not Allowed
	Foreign nationals can invest as per RBI and FEMA guidelines, usually under the Automatic Route	Member, nominee and director must be an Indian resident	Foreign nationals can invest as per RBI and FEMA guidelines, usually under the Automatic Route	Nnon Resident Indian (NRI) can be a partner in the Partnership Firm, subject to RBI regulations	Foreign Nationals cannot own proprietorship business in India
Taxability	Moderate	Moderate	High	High	Low
	Lower rate of 25% for companies with gross turnover of INR 400 Crore. Additional dividend distribution tax may apply	Same as Private Limited Company	Tax rate of 30% on business profits, tax benefits to partners on profit distribution is high	Same as LLP	Tax rates for individuals apply to Proprietorship Firm, as per the Income Tax slab
Compliance Requirement	High	High	Moderate	Low	Low
	Private company has the highest compliance requirements, both annual and event based	OPC compliance requirements are similar to PLC, except conducting an Annual General Meeting (AGM)	Annual filing and few event based filings are necessary, but lesser compliance requirements as compared to company structure	ITR of partnership needs to be filed annually, no major compliance requirements otherwise	No requirement to file a separate ITR. Very less to no compliance hassle
	Know More	Know More	Know More	Get Started	Know More

Frequently Asked Questions

The formation and Registration of a Partnership Firm in India

2018-06-20T11:15:08+05:30

Whether Partnership Deed registration is compulsory?

The Partnership Act provides that both registered and unregistered partnerships are valid and recognised by law. Partnership registration is not compulsory but is beneficial due to effects of non-registration. Mostly, the businesses at initial level prefer unregistered partnership till they reach stable level. The unregistered partnership can be registered at any time after its formation.

2018-07-24T11:07:27+05:30

What is the minimum capital requirement to start a Partnership Firm?

Formation of Partnership Firm does not require any minimum amount. It can be started with any amount of capital contribution by the partners. The Partners can contribute in any amount agreed and in any form being tangible (cash, premise) or intangible (goodwill, intellectual property). The Partners can introduce capital in any ratio, equal or uneven.

2018-07-24T11:07:58+05:30

What are the effects of non-registration of Partnership?

Due to non-registration, the firm cannot file suit against any partner or the third party. A partner also cannot sue the partnership firm for his claim. However, the third parties can sue the firm to enforce their dues or claims. Non-registration does not affect the rights of third parties. Also, the partnership can be registered any time after formation to remove the said effects.

2018-07-24T11:08:22+05:30

How many persons are required to register a partnership firm? Is there any specified requirement to become partner?

It is possible to form a partnership firm with only two partners by following the process described. Further, the Partner to be introduced and appointed in the Firm must be an Indian resident and citizen. NRI and Persons of Indian Origin can only invest in a Partnership with prior approval of the Government. The individual must be competent to contract and not a minor. A minor can be introduced to a Partnership Firm only for profit.

2018-07-24T11:08:56+05:30

What are the advantages of a registered partnership firm?

Only a registered partnership firm can claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party. Hence, it is advisable for partnership firms to get it registered sooner or later. Also, only a registered partnership firm can file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act. An unregistered Partnership Firm can get registered at any point of time after its establishment.

2018-07-24T11:09:27+05:30

Under which Government Authority is the application of Partnership Firm Registration submitted?

The application for Partnership Firm Registration in India is submitted with the Registrar of Firms (RoF) under whose jurisdiction the Place of Business of Partnership Firm falls. The application of Registration is made in required form along with submitting the Partnership Deed. At the end of the registration procedure, the Certificate of Registration is issued by respective RoF. The process and time of registration may differ for each RoF.

2018-07-24T11:10:19+05:30

Which points should be considered by all the Partners while drafting Partnership Deed?

The Partners should specifically mention about the main object and activities along with major clauses related to capital contribution, profit sharing ratio of the partners, management and administration of Partnership Firm. Further, the signed Partnership Deed shall be duly stamped and notarized.

2020-07-28T07:40:04+05:30

What is the amount of Stamp duty payable on Partnership Deed?

To confirm the validity of the partnership deed, the partners must pay stamp duty required as per the capital of the firm. The amount of stamp duty payable depends on the amount of capital contribution by partners. The rate of duty is prescribed under State Stamp Act and which is different for every State.

2018-07-24T11:11:11+05:30

Whether the notarisation of the Partnership Deed is necessary?

Yes, notary on Partnership Deed is necessary in every case for an unregistered or registered partnership firm.

2018-07-24T11:11:41+05:30

When can the partnership firm apply for PAN and TAN?

Applying for the PAN and TAN is possible after the execution of a Partnership Firm Agreement or after partnership deed registration with respected RoF. The physical copy of the PAN will be received at the registered Business Place only after being dispatched by the Income Tax Department.

2018-07-24T11:12:42+05:30

How long does it take to register a Partnership Firm in India?

The registration of Partnership Firm in India can take 12 to 14 working days. However, the issuance of Registration Certificate can take place as per the regulations of the concerned state. The time period for registration of Partnership Firm is subject to Government processing time and that varies for every State.

2018-07-24T11:13:09+05:30

What are the compliance requirements for Partnership Firm?

The Partnership Firm shall maintain the Books of Accounts and Financial Statement. The Income Tax Return shall be filed for the respective financial year before the due date as per the Income Tax Act.

2018-07-24T11:13:36+05:30

Whether audit is required for Partnership Firm?

Partnership firms do not need to prepare audited statements for each year. However depending on the turnover and a few other criteria, a tax audit statement might be necessary.

2018-07-24T11:14:14+05:30

Can a Partnership Firm be converted into a Private Limited Company or LLP?

A partnership firm can be converted to a Private Limited Company or a LLP considering its requirements. However, the procedures to convert a Partnership firm into a Company or LLP are cumbersome, expensive and time-consuming. Thus, it is wise for many entrepreneurs to consider and start a LLP or Company instead of a Partnership firm.