Partnership Firm Registration

Partnership Firm Registration is the most popular structure of business. A partnership firm is an association of two or more persons coming together to form a business and share the profits in an agreed ratio.

The business includes trading, occupation and profession. There are very few compliances as compared to other forms of business.

The Indian Partnership Act, 1932 is a governing act for regulating partnership firms in India. The person who works together to form the partnership firm is known as a partner. The partnership firm is formed with a written contract between two or more partners.

Process of Partnership Firm Registration

The registration of a Partnership Firm is fully optional under the Indian Partnership Act, 1932. It is the voluntary decision of the partners. The following are the steps given for registering a Firm:

Step 1: Application for Registration

An application form must be filled out to the Registrar of firms (ROF) of the particular state where the firm is situated with prescribed fees. The application form for registration shall be signed and verified by all the partners.

The registration application step of the process must include the below-mentioned details:

• The name of the firm
• The registered office of the firm
• The Partnership Firm Registration form must include the location of any other places where the firm carries on business
• The date of joining of partners
• The names and permanent residential addresses of the respective partners
• The duration of the firm

Step 2: Selection of The Name of the Firm

Any name can be chosen for a Partnership firm as decided by the partners. However, there are certain conditions that need to be followed in the process of selecting the name are:

• The name should not be similar or identical to an existing name of the firm carrying on the same business.
• The name shall not include words such as emperor, crown, empress, empire or any other words which depicts sanction or approval of the government.
• Applicants can check the name on the Ministry of corporate affairs website.

Step 3: Draft A Partnership Deed for Partnership Firm Registration Online

A Partnership Deed is the most important document for registration. It is made with the consent of all the partners on the stamp paper. The following are the necessary contents of the Partnership deed:

• Name and Address of each partner
• Contact details of partners
• Nature of the business
• Date of opening of the firm
• Capital contributed by each partner
• Profit/loss sharing ratio among the partners
• Rights, duties, salaries, commission or any amount payable to partners
• Details of loan offered by the partners
• The process to be followed in the event of retirement or death of an existing partner or in case of dissolution of the firm
• Accounting and Auditing
• Banking and voting rights
• Other clauses can be decided by a mutual discussion among the partners.

Step 4: Bank Account Opening

The current bank account should be opened in the name of the partnership firm registration.

Step 5: Applying for a PAN Card

A firm has to apply for Permanent Account Number to the Income tax department. The time taken for receiving the PAN is 3-7 working days approx. for registration under the department of Income tax.

The current bank account should be opened in the name of the partnership firm registration.

Step 6: File A Registration Application

The application requires a firm to provide information relating to the name, nature, and address of the business, the names and addresses of all the partners, and the date of commencement of business. An application form with prescribed fees is to be paid with the necessary documents submitted are:

• Form-1 for applying for registration
• Duly filled specimen of an affidavit
• Certified original partnership deed
• Proof of address of the firm

Step 7: Pay The Stamp Duties & Fees for Partnership Firm Registration

A registration fee and a stamp duty are to be paid at the time of the submission of the documents with the registrar of the firm (ROF). The fees of registration vary from state to state. The registration is not completed until the payment of all dues.

Step 8: Finalize the Partnership Deed

For legal recognition, the deed should be in written form on stamp paper. It must be duly signed by all the partners in presence of the notary. The stamp duty varies from state to state The signed copy is submitted to the registrar during the process.

Step 9: Partnership Firm Registration Certificate

When the registrar is satisfied with the registration application and the documents, he will register the firm in the Registrar of firms and issue the Partnership Registration Certificate. The registrar of firms contains up-to-date information on all firms, and anybody can view it after making the payment of given fees.

Step 10: GST Registration

An application shall be filed with the department of GST registration depending on the requirement of the business under the Goods and Services Tax Act.

The Partnership registration process is completed in 10 days approximately which is subject to departmental approval and replies from the respective department.

Partnership Firm Registration Documents

The documents which are required to be submitted to the Registrar at the time of the firm registration process are given below:

• Application in Form 1 with the specified fees
• A Partnership deed declaring the following:
• Identity Proof like Copy of Aadhar card or Voter Identity card
• An affidavit certifying all the above-mentioned details in the partnership deed and other registration documents are correct and best of their knowledge
• PAN card and residential proof of address of the partners
• Proof of principal place of business of the form (ownership documents or rental/lease agreement) – Signed NOC from the owner of the premises
• Any registration document issued to the firm by the state or central government, such as GST registration for Partnership registration.

You can also check the Partnership Firm registration status by going to the office of the Registrar of the particular state and making an inquiry regarding the status of registration at the Registrar's office. When the Partnership registration process is completed and the registrar is satisfied with the provided documents, he will register the firm in the Registrar of firms and issue a Certificate of Registration to the firm.

Importance of Registration of Partnership Firm

The registration of a partnership firm is optional and voluntary under the Indian Partnership Act, 1932. It is based on the choice of the partners. The firm registration is done on the Partnership Firm registration govt website at the time of its incorporation or during the continuance of the business. It is advisable to register the firm as the registration gives special rights and benefits as compared to the unregistered firms. The partnership firm benefits are:

• A partner can sue any partner or the partnership firm for enforcing his rights arising from a contract against the partner of the firm. In the case of an unregistered partnership firm, partners cannot sue the firm or other partners to enforce their rights.
• The registered firm can file a suit in opposition to any third party for enforcing a right. In the case of an unregistered partnership, it is not allowed to file a suit against any third party to enforce a right. Hence, any third party can file a suit against the unregistered partnership.
• The Partnership Firm registration can set off other proceedings to enforce a right arising from a contract. The unregistered firm cannot claim set off in the proceedings against them.

Checklist for Registration of Partnership Firm

The following points given are the basic steps for the Registration of a Firm:

• Drafting of Partnership deed
• Minimum two members as partners
• Maximum equal to or lower than twenty partners
• Select an appropriate name
• Principal place of business
• PAN card and opening of the current bank account of the firm

Key Features of a Partnership Firm

A firm has elements that make it suitable for small and medium-scale businesses. The following are the key features of the Partnership Firm Registration are:

• A firm can have a minimum of two people for incorporation.
• There are certain responsibilities and duties that are performed by the members.
• The types of business entities are easy to set up. The registration of the firm is made on a voluntary basis.
• It requires fewer legal formalities.
• Partnership has less involvement of compliances.
• A minor is incapable of becoming a part of the firm.
• The decision-making is very flexible.
• Each partner in a firm has unlimited liability.
• There is no minimum capital requirement for starting a firm.
• A partner is restricted to transfer his/her rights from the partnership without the consent of all partners.
• There is an advantage to the Partnership Firm registration, to approach banks for capital loans
• There is an increase in manpower because of the integration of specialized skills and abilities.

Advantages of Registering a Partnership Firm

The following advantages of firm registration are given below:

• Easy Formation

  It is not necessary to register the partnership and also it does not involve various legal formalities.

• Larger Resources

  The firm has larger resources because of a greater number of human resources involved in their business operations as compared with the sole proprietorship type of business.

• Flexibility in Operation

  The partnership has the advantage of flexibility as it can make decisions and changes according to the dynamic conditions of the economy.

• Better Management

  The ownership and administration in the partnership firm registration helps in the management of business very well.

• Sharing of Risk

  In the partnership, the losses are shared individually by the partners which amounts in reducing the burden and makes the process easy.

Significance of Registering Your Partnership Firm

Registering a partnership firm is important for several reasons:

• Legal Recognition

Registering your partnership firm provides legal recognition to your business. It means your firm is recognized by the government as a legitimate business entity

• Separate Legal Entity

A partnership firm registration is considered a separate legal entity from its partners. This means the business can enter into contracts, sue or be sued in its name, and own assets.

• Protection of Personal Assets

In a registered partnership firm, the partners' assets are protected from being used to pay off the business's debts or obligations.

• Increased Credibility

Registering your partnership firm increases its credibility and legitimacy in the eyes of customers, suppliers, banks, and other stakeholders.

• Tax Benefits

Registered partnership firms are eligible for various tax benefits and can claim deductions for expenses related to the business.

• Ability to Raise Funds

A registered partnership firm can raise funds from investors, banks, and other financial institutions, which is essential for the growth and expansion of the business.

In summary, registering your partnership firm provides legal recognition, protects personal assets, increases credibility, provides tax benefits, and enables the ability to raise funds