Partnership Registration

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Introduction

A partnership is a form of business where two or more people share ownership, as well as the responsibility for managing the company and the income or losses the business generates. The Partnership firms are easy to form and have less legal compliances. The partnership firms can be registered or unregistered and it is regulated under Indian Partnership Act, 1932. The Partnership Deed is the most essential document which decides the overall working and dissolution process. It is very important to draft the deed with full expertise so that conflicts do not arise between the partners in future.

The Act does not bind the partners to get the firm registered but comes with some drawbacks for the partners such as they cannot file or institute any cases against the partners and third parties. Therefore it is recommended to get the partnership firms registered. The State Department deals with the registration process and every state has different platforms and guidelines to submit the documents.

Advantages

Firm Registration

Advantages of Registration of Partnership Firm

Easy to Start

Partnership firms are one of the easiest modes to start. The only requirement for starting a partnership firm in most cases is a partnership deed.

Faster Decision making

Decision making in a partnership firm could be faster as there is no concept of the passing of resolutions.

Raising of Funds

When compared to a proprietorship firm, a partnership firm can easily raise funds. Multiple partners can come forward for more feasible contributions.

Sense of Ownership

Every partner owns and manages the activities of their firm. Ownership creates a higher sense of accountability, which paves the way for a diligent workforce.

Firm can file legal case

If partnership firm is registered under partnership Act it has authority to file any legal case against the third party

Less Compliance

The Partnership firm has minimal requirements of completing the compliance as compared to LLP

Document

Firm Registration

Document Required for Partnership Firm Registration

Pan card

of partners as proof of identity

Aadhar Card

of partners as proof of identity

Photograph

of Partners

Business Address Proof Owned Property

Electricity bill and Sale deed in case one of the Partner owns the place of business

Business Address Proof Rented Property

Electricity bill and Rent/lease agreement

Stamp Paper

as per the State

Procedure

Firm Registration

Procedure of Registration of Partnership Firm

Step 1

Fill the questionnaire provided by our team.

Step 01

Step 2

Provide us the all documents as per the category of your business mention above.

Step 02

Step 3

We will draft the Partnership Deed and other applicable documents and get it verified and signed by the partners.

Step 03

Step 4

We will then file the application for Partnership registration on the respective portal.

Step 04

Step 5

Once your partnership firm get registered we will provide you the Registration certificate.

Step 05

More Insights

Firm Registration

More Insights on Partnership Firm Registration

Minimum and maximum partners
The partnership act does not prescribe the criteria of minimum and maximum partners. But as per the Companies (Miscellaneous) Rules, 2014 the minimum number of partners should be at least 2 and maximum number of members in a partnership firm is 50. The. The maximum number of members for a firm carrying banking business is 20.

Partnership with no capital
Legally no minimum capital prescribed. So, to start a Partnership firm, you need to plan the future expenses and raise capital accordingly. However, any amount capital could be introduced in the form of Partners Contribution and the same shall be mentioned in the Partnership deed, as executed between the Partners.

Partnership Firms Tax Rate
Partnership firms are liable to pay income tax at the rate of 30% of total income. In addition to the income tax, a partnership firm is also liable to pay income tax surcharge on the amount of income tax at the rate of 12%, when total income exceeds Rs.1 crores. In addition to the income tax and surcharge, a partnership firm must pay education cess and secondary higher education cess.

Disadvantages of not registering Partnership Firm

The firm or other co-partners can not file case against any third party: If the firm registration is not done, then the firm or any other person on its behalf cannot file a suit against a third party for breach of contract which the firm has entered into. Further, the person filing the suit on behalf of the firm should be in the register of the firm as a partner.
No relief to partners for set-off of claim: Without firm registration, any action brought against the firm by a third party having a value of more than Rs. 100 cannot be set-off by the firm or any of its partners. Pursuance of other proceedings to enforce rights arising from the contract cannot be done either.
Third party can sue the firm: Even if the firm registration is not done a third party can bring legal action against the firm.

Faq's

Firm Registration

FAQ's on Registration of Partnership Firm

Is there any mandatory capital amount for partnership firm?

There is no Mandatory capital requirement for Partnership firm, one can start partnership firm with any minimum capital requirement.

How much time does it take to register a partnership firm?

The registration of Partnership Firm in India can take up to 12 to 14 working days. However, the time taken to issue a certificate of incorporation may vary as per the regulations of the concerned state. The registration of Partnership Firm is subject to Government processing time which varies for each State.

On how much amount of stamp paper partnership deed can be formed?

The stamp duty depends upon the capital contributed by the partners. There are different stamping provisions in different states.

On what extent I am liable towards my partnership firm?

Partner is liable to pay off the partnership firms debt to the extent partnership firm liabilities exceeds its assets. Partners will contribute in liabilities mentioned in partnership deed accordingly. Partners of Partnership firm have unlimited liability.

What is the difference between LLP and partnership firm?

LLP is a separate legal entity and can hold assets in its name. The status of Partnership Firm does not have separate identity from its Partners. The liability of Partners is limited to the extent of their contribution in LLP. Further, one Partner is not affected or not held liable for the actions of another Partner.

Can my partnership deed be oral?

Yes, partnership deed can be oral but it contains one disadvantage with that, you cannot use oral deed as evidence in court of law. Generally a partnership deed should be in written form to avoid any future conflict.

Whether we need to notarize the Partnership Deed?

Yes, notary is compulsory on Partnership Deed for an unregistered or registered partnership firm.

Whether audit is required to be done in case of Partnership Firm?

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

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