Partnership Firm Registration Process in India – A Complete Guide
The partnership is the most common form of business structure in India which is most favourable amongst medium-sized businesses. A partnership firm is created by two or more partner who comes together to join their resources for mutual benefits by sharing profit and loss in a prescribed ratio.
However partnership registration is not mandatory in India but getting it registered provides the legal existence to it and makes it easier to convert it later into other entities such as LLP, Company, etc. Partnership firm and Partnership Firm Registration are being discussed henceforth.
Partnership Firm Registration Process
A partnership firm can be registered by following these steps:
- Select the suitable name for partnership: Choose an appropriate name for your partnership firm which shall not resemble any other name registered or shall not use the words violating any law. For a safer side, check the name availability through MCA in case of the name as desired by you is not already registered. You can also get your name and logo registered as a trademark to secure it legally.
- Draft Partnership Deed: Partnership Deed contains the details of the rights & obligations of partners along with minute details about the firm. Common points forming the part of partnership deed are:
- Name & address of the firm
- Complete information about partners such as name, address, contact details, etc
- Nature and activities of the business
- Duration, if any
- Contribution of each partner
- The ratio in which the profit will get shared amongst the partners.
- Finalise the partnership deed as per the prescribed format: After drafting the deed, get it finally executed by printing it on stamp paper with the proper notary and by affixing the signature of each partner. Stamp duty payable in one state can be different in others.
- PAN Application for partnership firm: From the perspective of taxation, a partnership firm is not distinct from its partner; still it is advisable to get the PAN in the name of partnership irrespective of the fact whether you register your firm or not.
- Registration Application: Complete the application by including all the details of the firm, necessary information about a firm, partners, contributions, location of the firm, duration of the firm, and the date of commencing the business. Each partner shall sign the application & get it notarised.
- Submit the Application: File the application to Registrar of Company for its registration along with the following documents:
- Certified copy of Partnership Deed
- PAN of the partnership firm
- Supporting document for registered offices, such as registry in case the premise is owned otherwise rent agreement or NOC by the landlord
- ID proof and address proof of all the partners
- Declaration if affidavit certifying the correctness of the application.
- Stamp Duty and Fees: Complete the registration process by final submission of the application along with the payment of prescribed fees and stamp duty for partnership registration. Fees and stamp duty depends upon the state in which the firm is registered
- Registration Certificate: Once the applicant sends the final application to the registrar, he will verify the same and issue the registration certificate by sending it on mail id.
Types of Partnership Firm
There are two types of partnership firm that operates in India:
- Registered: partnership can be registered under Registrar of Firm having the jurisdiction as per the state on which firm is registered. The registered firm gets the legal status in the eyes of the law and thus get legally recognised.
- Unregistered: Unregistered firms get established by mare formation of partnership deed. Unregistered firms are regulated and govern as per the clause of the deed, and the partner’s rights and obligation are defined as per deed.
Characteristics of Partnership Firm
Following are the aspects of a partnership firm that makes it a favourable choice amongst various other business structures:
- The partnership is governed and came into existence by a simple creation of partnership deed.
- A partnership firm can be created to carry on the business of any nature, industry or profession
- Partners have to share the profit in pre-determined ratio and mutually agreed to bear the losses as well
- Business can be undertaken by all partners of even by one partner acting on behalf of every other partner
- Partners are personally liable for the loss or debt incurred in the business, i.e., their assets can be used to dispose of the losses.
- Partners can transfer the shares only after receipt of the consent of every other partner
- A partnership firm has no fix duration and can be continued for as long the partners want. However, in the case of two partner firms, the firm will come to an end in case of anyone deceased, becomes insolvent or retires.
Partnership firm plays a vital role in the success of new ventures. The partnership is formed with the motive of profit sharing, along with shared losses or uncertainty. For further assistance & information on the essential procedure to be followed before Starting the Partnership firm Online with consultant, you can contact us.