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Partnership Firm Registration

5,000+Partnership Firm Registrations since 2011

No more delays or difficulties! Register your business with India’s #1 provider of business incorporation services. Get a 7 day Guaranteed document upload to the MCA or receive a full refund T&C* 

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WHAT IS PARTNERSHIP FIRM?
  • A firm or company established between two or more partners with the goal of earning profit is called as a Partnership Firm.It is not compulsory to register a partnership firm but there are added advantages if a partnership firm is registered.Partnership deed is the legal document which is created to form a partnership firm.
  • Indian Partnership Act 1932 is the governing law which regulates the partnership firms in India.As per the act “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”. Maximum number of members in a partnership is 10 for a banking business and 20 for other businesses to enter into a partnership firm.
  • Partnership firms are not separate legal entity while the partners are.A partnership firm can not be debtor or creditor and can not own a property.The property, debit or credit of a partnership firm is actually for the partners in the eyes of law.The manner in which profits or losses are to be shared amongst partners must be explicitly mentioned in the partnership deed to avoid any confusions in the future.Every partner can carry on business on behalf of others.
  • A partnership firm would be dissolved if the number of partners reduces below 2 in case of death,incapacitation or resignation of a partner.

The advantages of a Partnership Firm are listed as follows:

  • Ease of Formation: Partnership firms are relatively easy and cost-effective to establish, involving fewer formalities compared to other business structures.
  • Varied Skill Sets: Partners can bring diverse skills, knowledge, and resources to the business, enhancing its overall capabilities.
  • Shared Financial Burden: Partners share the financial responsibilities and risks, making it more manageable for each individual.
  • Tax Benefits: Partnership firms are not subject to income tax themselves. Instead, profits are taxed at the individual partners’ tax rates, which can lead to potential tax savings.
  • Flexible Decision-Making: Partnerships allow for flexible decision-making as partners have a say in the business’s operations and direction.
  • Greater Access to Capital: Partners can contribute capital, and additional partners can be added to raise more funds for the business.

Unlimited Liability: Partners have unlimited personal liability, meaning they are personally responsible for the firm’s debts and obligations, which can put their personal assets at risk.

  • Limited Capital: Raising substantial capital may be challenging as it relies on the partners’ contributions and potential loans.
  • Conflict Potential: Differences in opinion among partners can lead to conflicts and hinder decision-making.
  • Limited Growth Potential: A partnership may need more growth and scalability compared to larger business structures.
  • Continuity Issues: The firm’s continuity may be disrupted due to a partner’s death, withdrawal, or insolvency unless provisions are made in the partnership deed.
  • Tax Complexity: Partnerships can involve complex tax arrangements, and each partner is responsible for their own tax compliance, which may require professional assistance.

Choosing a partnership firm structure should involve careful consideration of these advantages and disadvantages in the context of your business goals and circumstances.

Step to Register.

Step 1 :
  • All the previously mentioned records must be submitted to the Registrar of firms of the state

 

Step 2:
  • An authentication of Registration is then given, by the Registrar, and a duplicate should be given to all the accomplices

 

Step 3:
  • Likewise, a different enrollment with the Income Tax office is to be done to maintain any future problems and should get a PAN card and a bank account under the name of the Partnership firm
Minimum Criteria
  • Minimum of two partners
  • No minimum share capital
Prerequisites For Partners
  • Pan Card
  • Aadhaar Card
  • Business Address Proof (utility bill)
  • Passport Size Photo
  • Mail id
  • Phone no.

Importance of Registering a Partnership Firm

The registration of a partnership firm is optional and not compulsory under the Indian Partnership Act. It is at the discretion of the partners and voluntary. The firm’s registration can be done at the time of its formation or incorporation or during the continuance of the partnership business. 

However, it is always advisable to register the partnership firm as a registered partnership firm enjoys certain special rights and benefits as compared to the unregistered firms. The benefits that a partnership firm enjoy are:

  • A partner can sue against any partner or the partnership firm for enforcing his rights arising from a contract against the partner or the firm. In the case of an unregistered partnership firm, partners cannot sue against the firm or other partners to enforce his right.
  • The registered firm can file a suit against any third party for enforcing a right from a contract. In the case of an unregistered firm, it cannot file a suit against any third party to enforce a right. However, any third party can file a suit against the unregistered firm.
  • The registered firm can claim set-off or other proceedings to enforce a right arising from a contract. The unregistered firm cannot claim set off in any proceedings against it.

Timeline

partnership firm registration timeline

 

Action By Khata Dekho
  • Once the Documents are uploaded we’ll start the step -by-step process of Incorporation

Frequently Asked Questions (FAQs)

A partnership is a legal agreement wherein two or more individuals give their approval to work towards a common goal, such as building a business.

A partnership firm has an informal structure, which is why partners are not entitled to follow any detailed rules. This makes this kind of company incorporation quite common in the start-up world.

A partnership does not pay any income taxes. Instead, the profits that are generated pass through the business to the partners who are involved. Each person then reports his or her share of the business profits individually while filing taxes.

This fees depend on a lot of factors and varies from case to case basis.Khata Dekho provides the best pricing in the market.Contact our expert to know the details.

If you are encountering a dispute, you can try solutions such as mediation and arbitration. However, if these don’t function, then you can take the case to court.

The main difference between an LLP and a partnership firm is that the partners are personally liable for any business debts in the last. This implies creditors can go after the partner’s personal assets if required.

The partners in a partnership firm are the owners, and thus, are not a separate entity from the firm. Any legal issues or debt incurred by the firm is the obligation of its owners, the partners.

A partnership must have at least two partners. A partnership firm in the banking business can have up to 10 partners, while those employed in any other business can have 20 partners. These partners can split profits and losses equally or unequally.

Some of the disadvantages of going forward with the company registration as a partnership firm contain:

  • Partners are individually responsible for business debts 
  • Partners are subject to the actions of other partners 
  • If one partner leaves, the partnership can end 
  • Shared decision-making implies you do not always have full control over internal affairs. This can direct to disagreements or paralysis of the partnership.

The deed should include the names of the partners and their addresses, the partnership name, the date of commencement of operation of the firm, the type of partnership, any capital invested by each partner, and the profit-sharing matrix, rules, and regulations to be followed for the input of partners or removal.

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