Partnership Firm Registration
Generally, the Partnership firm is a firm that is collectively owned by Partners and operates the business and shares their liabilities and responsibilities with each other based on the terms and conditions as per the registered Partnership Deed. Partnership firms are of two different types, registered and non-registered firms and it is not mandatory to register but it is highly recommendable to go for Partnership firms registration online in India, to enjoy various benefits from the government.
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Overview of Partnership Firm Registration
Advantages of Partnership Firm Registration
Funds Raising
Compared to other firms or business structures like a proprietorship firm, funds can be easily raised the registration of partnership firms. Banks consider this type of firm more favorable for approving credits and loans and also having multiple partners in the firm pay the way to get a more feasible contribution.
Easy Management
All the partners of the partnership firm are assigned with their own works and responsibilities considering their capability, as drafted in the partnership deed. Partnership deed aids the partners of the firm to manage the business smoothly without any type of conflicts and disputes.
Easiest Business Structure
Partnership firms are broadly considered as one of the easiest business structures as they can be incorporated by simply formulating a partnership deed for which registration process is necessary. Therefore, it can be formed anytime when the partners are ready to contribute and just with very minimum documentation whereas in the case of other types of firms it requires about 10-15 days to cover up all the formalities such as obtaining DSC, DIN, DPIN name approval, and so on.
Decision Making
It’s an easier and simple process to make a decision in a partnership firm registration in India as you don’t have to follow any rules and regulations to pass a resolution in the firm. A partner of the firm can perform transactions or money-related activities on behalf of the partnership firm without any consent of other designated partners.
Disadvantages of Partnership Firm Registration
Unlimited Liabilities
The liabilities of partners of the partnership firm are not limited which is the biggest drawback for the partners of the firm. In case of any other misfortune or debt, the personal assets of the partners can be used to clear the loans or issues or debts. Limitation in the maximum number of members, yes, the maximum number of partners is limited to 20 in the Partnership Firm
Less Trustworthy
As a partnership firm, can be formed easily and can run without any registration process and can also function without any specific rules and regulations makes it less trustworthy among the general public.
Abrupt Dissolution
The registration of partnership firm is compulsory and can be dissolved easily in case of insolvency or death of any partner. Such conditions halter the growth and development of the business.
Documents Required
- Partnership Deed: A partnership deed is an agreement which is prepared and formed within the partners of the firm which defines all the rules, duties, regulations, methodology, functions and shares of the business. A partnership deed registration online is mandatory as it helps to avoid future disputes, discomfort and conflicts between the partners. A Partnership deed is created and signed by all the partners or the members on the Judicial Stamp Paper which costs around Rs. 2000/-
- PAN Card: All the registered partnership firm or the members of the partnership firm are required to present their PAN cards as their identity proof.
- Address Proof: All the designated partners have to present a copy of their address proof such as aadhar card, voter id, driving license, ration card etc. The address and information given in the address proof document should match with PAN card information.
- Office Address Proof: Address proof of the registered working place has to be submitted. If the registered office place is a rented property, then the applicant has to present the rent agreement with a utility bill such as electricity bill, gas bill, water bill, property tax bill, and so on. And also the applicant should submit the No Objection Certificate or NOC from the owner of the registered office place.
Registration Procedure of Partnership Firm in India
- Select a Unique name for the partnership firm
- File Form 1 application of partnership firm registration.
- Submit the filled application form to the Registrar of Firm of the state where the firm is going to start. The application form has to be filled in prescribed format with specified fees amount.
- A partnership deed registration process is planned and prepared properly with the consent of all the partners or the members of the firm on the stamp paper. Following are important components of Partnership Deed
- Information of the partners and firm such as name, qualification, address, etc.
- Nature of the business and the business activities involved
- Details about The capital contribution made by all partners of the firm
- Shares and the interest of all the partners
- Details about the sharing of Profit and loss ratio among all the partners of the firm
- Rules, regulations, rights, duties, commissions, salaries, or payable amount of the partners of the firm
- Details of loans offered by the partners of the firm
- Process or circumstances that would be followed if a designated partner is death or getting retirementÂ
- Other articles made with mutual consent of all the members or partners of the firm
- Submission of all needed documents with the online partnership deed registration which was prepared by the partners of the firm.
- After submission, the documents are verified by the concerned authorities. If everything falls under the provisions of the act, the registration certificate is granted to the firm.
Frequently Asked Questions
Minimum of 2 individuals and a maximum of 20 individuals is needed for the registration of a partnership firm company.
The individuals who are residing in India can only become partners or members in a Partnership firm. Foreign Individuals who want to form their business in India can choose Private Limited Company.
Yes, a partnership firm can be converted into a Private Limited company by submitting the prescribed form to the concerned authority.
There is no minimum capital requirement for the registration of a partnership firm in India. All it needs is the balance in the current bank account.
Once the partnership deed is notarized, you can apply for the PAN Card. You can take our assistance and guidance if you need to apply for PAN for the Partnership Firm.
As per the Partnership Act, 1932, there is no such provision of the audit necessary for the Partnership Firm. However, if the turnover of the firm is more than 2 Crores, then it is mandatory to get the account books audited.
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