Register Partnership Firm




Ideal for Small or Medium Sized Businesses.



Starting at :₹3999 (all inclusive)




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PARTNERSHIP FIRM

Definition Advantages Procedure Documents FAQs


Partnership Firm


A Partnership is defined by the Indian Partnership Act, 1932, as ‘the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all’. This definition gives three minimum requirements to constitute a partnership firm, viz. (1) there must be an agreement entered into orally or in writing by the persons who desire to form a partnership (2) the object of the agreement must be to share the profits of business intended to be carried on by the partnership, and (3) the business must be carried on by all the partners or by any of them acting for all of them.

A partnership firm is best for small businesses that plan to remain small. Low costs, ease of setting up and minimal compliance requirements make it a sensible option for such businesses. Registration is optional for General Partnerships.However for larger businesses, it has lost its relevance with the introduction of the Limited Liability Partnership (LLP). This is because an LLP retains the low costs of a partnership while providing the benefit of limited liability, which means that partners are not personally liable for the debts of the business.

The partners in a partnership firm are the owners, and thus, are not separate entity from the firm. Any legal issues or debt incurred by the firm is the responsibility 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 engaged in any other business can have maximum 20 partners.

A partnership is easy to form as no cumbersome legal formalities are involved. A partnership is formed by an agreement, which may be either written or oral. When the written agreement is duly stamped and registered, it is known as "Partnership Deed" which may be registered or not registered. Ordinarily, the rights, duties and liabilities of partners are laid down in the deed. But in the case where the deed does not specify the rights and obligations, the provisions of The Indian Partnership Act, 1932 will apply.





Why Partnership Firm ?



BETTER DECISION MAKING Partners share the decision making and can help each other out when they need to. More partners means more brains that can be picked for business ideas and for the solving of problems that the business encounters.
GREATER FLEXIBILITY Due to the limited number of partners, there is flexibility in the operations of business as the partners can amend any objectives or change any operations any time by mutual consent.
SHARED RESPONSIBILITY Partners can share the responsibility of the running of the business. This will allow them to make the most of their abilities. Rather than splitting the management and taking an equal share of each business task, they might well split the work according to their skills and the risk is also shared among partners.
EASE OF FORMATION A Partnership is easy to form as no cumbersome legal formalities are involved Registration is not compulsory in the case of Partnership firm. It can be formed without any legal formality and expenses. Thus, it is simple and economical to form and operate.
MINIMAL COMPLIANCES General Partnerships do not need to appoint an auditor or, if unregistered, even file annual accounts with the registrar. Annual compliances are also fewer as compared to an LLP. General Partnerships do need to file Income Taxes and, depending on turnover, service and sales tax.
RELATIVELY INEXPENSIVE A General Partnership is cheaper to start than an LLP and even over the long-term, thanks to the minimal compliance requirements, is inexpensive.




Process of formation of Partnership Firm




1

Partnership Deed Drafting

2

Partnership Deed Registration













A Legal Suvidha Financial Expert will first understand your business, Partners, Partnership structure and other relevant details to draft a Partnership Deed that is acceptable to all Partners.




Documents Required for Partnership Registration






ID and Address Proof of Partners like Pan Card/Passport/Voter ID/Aadhar Card/Driving License Copy of the Partners.


If Property on Rented : Rent Agreement and NOC from Landlord.


if Property is own :Need Electricity Bills or any other Address Proof.


Affidavit declaring intention to become partner




Frequently Asked Questions





What is the difference in documentation for Registered Partnership Firm and Unregistered Partnership Firm?
In Registered partnership Firm

Every partner needs to verify and sign the application & ensure that the following documents and prescribed fees are enclosed with the registration application :
• Application for Registration in the prescribed Form – I.
• Duly filled Specimen of Affidavit.
• Certified copy of the Partnership deed on appropriate non judicial stamp paper.
• Proof of ownership of the place of business or the rental/lease agreement thereof.
• Affix court fee stamp & payment of prescribed fee for registration by demand draft.

And

In Unregistered Partnership Firm

A Partnership deed on appropriate non judicial stamp paper duly signs by every partner required to be notarized by notary is require executing and from that date Partnership Firm deemed to be registered.

When registrar of firms issues the certificate of registration?
Once the Registrar of Firms is satisfied that the application procedure has been duly complied with, he shall record an entry of the statement in the Register of Firms and issue a Certificate of Registration.

Who can be a partner in Partnerhip Firm?
Any person who is an Indian citizen and a Resident of India can become partner in a partnership firm. However Non-Resident Indians can only invest in a partnership with after obtaining prior approval of the Government.

Can an existing partnership firm be converted into a company or LLP?
Yes, an existing partnership firm can converted into a company or LLP.

Is a partnership firm a separate entity?
The partners in a partnership firm are the owners, and thus, are not separate entity from the firm. Any legal issues or debt incurred by the firm is the responsibility of its owners, the partners.The partners have unlimited Liability.

How many partners can there be?
A partnership must have at least two partners. A partnership firm in the banking business can have up to 10 partners, while those engaged in any other business can have 20 partners. These partners can divide profits and losses equally or unequally.

Is partnership firm registration necessary?
No, registration of a partnership is not necessary. However, for a partner to sue another partner or the firm itself, the partnership should be registered. Moreover, for the partnership to bring any suit to court, the firm should be registered. For this reason, it is recommended that larger businesses register the partnership deed.

What are the main aspects of a partnership deed?
The deed should contain names of the partners and their addresses, the partnership name, the date of commencement of operation of the firm, any capital invested by each partner, the type of partnership and profit-sharing matrix, rules and regulations to be followed for intake of partners or removal.



Compare your options



Private Limited Company Limited Liability Partnership One Person Company Partnership Firm
Preferred for Start-ups Professional Services Firms Sole Proprietors Small-medium sized businesses
Limited Liabilty Protection Yes Yes Yes No
Minimum Requirement 2 Shareholders 2 Designated Partners 1 Director
1 Nominee
2 Partners
Fund Raising Options High Low Low Low
Tax Advantage Few Most Few Minimal
Statutory Compliances High Low High Minimal
Compliance Cost High Medium Medium Low




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