Partnership Firm Registration

Partnership Firm

what is partnership firm?

Partnership firms are governed by the Indian Partnership Act, 1932, which defines the rights, duties, and obligations of the partners in a partnership firm. The Act also lays down the rules for the formation, registration, and dissolution of partnership firms.

Some of the key features of a partnership firm are:

1. Number of partners: A partnership firm must have at least two partners and can have a maximum of 20 partners in case of non-banking business and 10 partners in case of banking business.

2. Mutual agreement: Partnership is based on a mutual agreement between the partners, which can be oral or written.

3. Unlimited liability: Each partner in a partnership firm has unlimited liability for the debts and obligations of the firm.

4. Sharing of profits and losses: The profits and losses of a partnership firm are shared among the partners in a predetermined proportion, as agreed upon in the partnership deed.

5. Joint ownership: The partners in a partnership firm jointly own and manage the business.

6. Dissolution: A partnership firm can be dissolved by mutual agreement, insolvency of a partner, or by court order.

Advantages of partnership firm

Benefits

There are several benefits of partnership firm, which are as follows:

Easy to form

Partnership firms are relatively easy to form as compared to other forms of business entities like companies. They do not require any legal formalities for their formation, except for registration with the Registrar of Firms.

Shared responsibility

The partners in a partnership firm share the responsibility of managing the business, which reduces the burden on any single partner.

More capital

Partnership firms can raise more capital as compared to sole proprietorship firms, as there are more partners who can contribute to the business.

Diverse skills and expertise

Partners bring in diverse skills and expertise to the business, which can help in its growth and success.

Taxation benefits

Partnership firms are not liable to pay any tax on the profits earned by the firm, as the partners are taxed individually on their share of profits.

Flexibility

Partnership firms are relatively flexible in their operation and management as compared to companies, which have to comply with several legal formalities.

Continuity

Partnership firms can continue to exist even if one partner leaves, as long as the other partners continue the business.

Partnership Firm Registration

Process

The process of partnership firm registration involves the following steps:

1. Selection of a suitable name: The first step in the registration of a partnership firm is to select a suitable name for the firm. The name should be unique and not similar to the name of any other existing firm.

2. Preparation of partnership deed: The partnership deed is a legal document that outlines the rights, duties, and obligations of the partners in the firm. The partnership deed should be prepared in accordance with the Indian Partnership Act, 1932, and should be signed by all the partners.

3. Payment of stamp duty: The partnership deed should be printed on stamp paper of appropriate value, depending on the capital contribution of the partners.

4. Application for PAN and TAN: The partners should apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the partnership firm.

5. Registration with Registrar of Firms: The partnership firm should be registered with the Registrar of Firms in the state where the firm is located. The application for registration should be made in Form No. 1, along with the partnership deed, address proof, and identity proof of the partners.

6. Obtaining the certificate of registration: Once the Registrar of Firms is satisfied with the application, the partnership firm will be registered and a certificate of registration will be issued.

The entire process of partnership firm registration can take anywhere between 10-15 working days, depending on the time taken for verification and approval by the Registrar of Firms.

One person company

Document required

PAN Card

PAN Card of all partners Foreign nationals may provide passport

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