Partnership Firm Registration
Partnership business model is appropriate for small and medium sized businesses, primarily operating in un-organized sectors with multiple promoters.
Digital Filings can help you in…:
Collating the relevant details to understand your business needs;
Preparing the required documents and share the first draft in just four days;
Drafting (if required) another round (maximum two) of information iterations at zero cost to you.
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Understanding the Partnership Model
Partnership Firm is the most popular business form that consist the management and control of two or more individuals who carry business activities as per the terms and objectives defined in Partnership Deed. Its low investment, ease of setting-up, and minimal compliance requirements make it a good option for aspiring entrepreneurs that are unlikely to opt for any debt. Moreover, registration is optional for operating a Partnership Firm in India, however, it is sensible to register a Partnership venture to enjoy certain additional privileges.
Recently introduced business form in India, Limited Liability Partnership (LLP), however, has started impacting the Partnership model as LLP provides unlimited liability to the partners, which means they are personally liable for all the business related debts.
A partnership firm is a business structure in which two or more individuals manage and operate a business as per the terms and objectives set out in a Partnership Deed that may or may not be registered. In such a business, all members are individually the partners and share the liabilities as well as profits of the firm in a predetermined ratio.
Key Requisites for a Partnership Firm include:
Partnership Deed determines the ownership structure, profit sharing ratio, along with rights and responsibilities of each of Partner involved. A partnership deed can be registered with the Registrar, and experts at Digital Filings can make it simpler for you.
Bank Account can be opened in the name of a Partnership firm for which a copy of partnership deed and relevant KYC documents of every Partner must be submitted along with other documents as required by the Bank. Associates at Digital Filings can assist you in completing all the required documents so that your bank account is opened easily.
Key-Advantages of a Partnership Firm
Fast Registration
Partnership firm can start operating in just 3 to 5 business days, even with an unregistered Partnership Deed. Registration of business, however, provides certain privileges. The most prominent advantage of registering a partnership, it enables partners to file law-suits to enforce business operations as per the Partnership Act, along with other benefits.
Easy Management
There is fewer or even no annual compliances are required for operating a partnership firm as compared to company and LLP business models. The partners literally do not need to hire an auditor as they do not have to file Income Taxes and / or service and sales taxes, however, the amount of taxes depend on the annual turnover of the firm.
Economical
Unlike an LLP or a Company form of business, setting-up a partnership firm is not just easy but economical as well (even over the long-run), simply because of its minimal financial and legal mandates. This is the reason why, despite its various shortcomings (including unlimited liability), home ventures mostly invest in the partnership model of business.
Minimal Legalities
If a partnership is not registered, then there is no need to file annual accounts with the Registrar. Moreover, partners can choose any business name, provided it is not infringing on an already registered trademark. There is, however a flip-side to it, if a business name is not registered, any firm or individual can use the same name for the venture, unless trademark registration is obtained.
Required Documentation Chart
Indian Resident
- Copy of PAN Card (mandatory)
Residence Proof
- AADHAAR Card
- Voter’s Card
- Bank Statement
- Electricity / Water Bills (recent two-months)
Proof of Registered Office
- Property Tax Receipt
- Electricity / Water Bills (recent two-months)
Additional Documents:
- Form No. 1 (Application for registration under Partnership Act)
- Original copy of Partnership Deed, signed by all partners
- Affidavit declaring an intention to become a partner
- Rental or lease agreement of the property / campus on which the business is set*
*Along with the Rent Agreement, a letter of consent by landlord containing a signed agreement to use the rented space as a registered office is also obligatory to be submitted.
Non-Resident Indian / Foreign Resident
- Notarized or Apostilled Copy of Passport (mandatory)
Residence Proof
- Notarized or Apostilled Copy of Passport (mandatory)
Proof of Registered Office
- Property Tax Receipt
- Electricity / Water Bills (recent two-months)
Additional Documents:
- Form No. 1 (Application for registration under Partnership Act)
- Original copy of Partnership Deed, signed by all partners
- Affidavit declaring an intention to become a partner
- Rental or lease agreement of the property / campus on which the business is set*
*Along with the Rent Agreement, a letter of consent by landlord containing a signed agreement to use the rented space as a registered office is also obligatory to be submitted.
What People Frequently Ask…
What is a partnership firm?
A partnership firm is a business structure where the business is managed and controlled by two or more individuals sharing the firm’s liabilities and profits in a pre-determined ratio. Partners in a Partnership Firm need to operate the business as per the agreed terms of the Partnership Deed that may or may not be registered.
Get online partenership firm registration in Delhi at Rs.5899 only with Digital Filings. Find step-by-step process for how to register partnership firm in India.
Who should set up a partnership firm?
A partnership firm is best suited for small and medium businesses, mainly operating in unorganized sectors. Low investments, easy set-up, and minimal compliance requirements make partnership a sensible choice for small / home businesses.
In case of a large business, however, more relevant model is the recently introduced Limited Liability Partnership (LLP) as it not just retains the low investment factor of a partnership but also provides the benefit of unlimited liability, in which the partners are not personally liable for the business debts.
Can a partnership firm be a separate entity?
All the partners in a partnership firm are the owners, and thus, do not own a separate entity from the firm. Liability of the Partners is also unlimited, and they are jointly liable for the liabilities of the firm. This means that if the assets and property of the firm is insufficient to meet all its debts, the creditors can recover their loans by disposing the personal property of the individual partners.
How many partners can form a partnership firm?
There must be at-least two partners and a maximum of 20 to form a partnership firm. A partnership firm in the banking business and partners engaged in any other business can have 10 and 20 partners, respectively. These partners can divide profits or losses equally or as they may decide.
Is registration obligatory to set-up a partnership firm?
No, registration of a partnership is not necessary, however, it should be registered, if a partner needs to take any legal action or files a lawsuit on another partner or the firm itself. That is why the experts at Digital Filings recommend that larger businesses must register the partnership deed.
What are the advantages for registering a Partnership firm?
Only a registered Partnership firm can file a lawsuit against the firm or other partners an only a registered Partnership firm can claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to each other) or other proceedings in a dispute with a third party. Digital Filings experts, therefore, advise the Partnership firms to get registered.
What are the primary inclusions of a partnership deed?
A partnership-deed should contain the partnership firm name, all partners’ names and their addresses, the date of commencement of the firm, the type of partnership, capital invested by each partner, profit-sharing matrix, and set guidelines to hire or remove a partner.
Who can become a Partner in a Partnership firm?
The Partner must be an Indian citizen and a Resident of India. Non-Resident Indians (NRIs) and Persons of Indian Origin can only invest in a Proprietorship with prior approval of the Government of India.
What is the capital required to start a Partnership firm?
There is not any minimum capital limit for starting a Partnership firm.
How can Digital Filings assist a Partnership firm?
Every Associate at Digital Filings is well exposed to various business requirements for a partnership model and can effectively to help you setting-up your Partnership firm. We can help you drafting the Partnership deed, based on the requirements, and can also help to register the drafted Partnership deed with the relevant Authorities to make you firm a Registered Partnership firm.
Who registers a Partnership firm?
Partnership firms are registered by the Registrar of Firms, under the Indian Partnership Act, 1932.
How to open a bank account for a Partnership firm?
A registered Partnership deed along with identity and address proof of the Partners are required to open a bank account for a Partnership firm.
Will my Partnership firm have a Certificate or Registration?
If the Partnership firm is registered, the Partnership deed will be registered and a Registration Certificate will be issued by the Registrar of Firms.
Can I transfer my Partnership firm?
There are certain restrictions on the transfer of ownership interest in a Partnership firm. A Partner can transfer interests in the firm to any of the existing partners post getting a unanimous consent of all other partners.
Who can invest in a Partnership firm?
All Indian Nationals and Indian Residents are allowed to invest in a Partnership firm without any approval. Usually the investors of a Partnership firm are called the Partners and in the absence of any agreement, all partners can participate in business operations.
What are the annual compliance requirements for a Partnership?
Partnership firm are required to file their annual tax return with the Income Tax Department. Other tax filings, including GST / service tax filing or VAT / CST filing may be required from time to time, based on the business performance. Annual reports or accounts, however, are not required to be filed with the MCA, which are obligatory in a LLP or Company model.
Is audit required for a Partnership firm?
No, it is not necessary for Partnerships to prepare audited financial statements ever year, however, a tax audit may be required based on turnover and other conditions.
Partnership firm be converted into a company or LLP?
Yes, there are procedures for converting a Partnership business into a Company or a LLP at a later date, however, the conversion process is quite cumbersome, expensive and time-consuming.
Pocket-Friendly Options
Basic
Package Include:
Partnership Deed Drafting by a Lawyer- Compliance Tracking.
- (Above price includes all taxes and relevant government fees.)
Standard
Package Include:
- Partnership Deed Drafting by a Lawyer along with Deed Registration Compliance Tracking (Above price includes all taxes and relevant government fees.)
Premium
Package Include:
- Partnership Deed Drafting by a Lawyer along with Deed Registration Trademark Filing Compliance Tracking (Above price includes all taxes and government fees.)
How we Do It…
Experienced associates at Digital Filings can assist you registering and setting-up your partnership firm in maximum of 3 to 5 business days.
We will do it all from drafting and registering the partnership deep along with obtaining PAN and TAN for your business.
Understand and Un-Complicate
When you first connect with us, proficient business advisers at Digital Filings will begin with understanding your business-idea as well as knowing the venture needs. Post understanding the requirements for your partnership firm, we will help you simplifying certain business-critical procedures, including drafting and registering the Partnership Deed.
Organize the Un-Organized
We will also assist you in drafting an appropriate Partnership Deed, based on your business-idea and partnership structure. We will then help you getting the drafted and agreed-upon deed registered with the relevant registration authorities to make your partnership firm a Registered Partnership Firm.
Get you There Quicker
Once we attain your agreement on everything, a lawyer will be aligned with you, who will furnish the relevant details and send across to you for a review, all this will be done within 3 to 4 working days. If further details are required, we will reach to you, however, you are welcome to get back to us with any question, concern, suggestion, or modification.
Note: We will do two rounds of iterations without charging anything above the price of the opted service package.
Ensure you Get More for What you Pay
Digital Filings always focus on getting its patrons more for what they pay. In addition to the above services, we will also assist you registering and obtaining PAN and TAN for your Partnership Firm once the it gets registered.