REGISTRATION OF A PARTNERSHIP FIRM
A Partnership Firm is a form of business constitution for businesses that are owned, managed and controlled by an Association of People for profit. A partnership firm is formed when a group of people join together for conducting business activities. Partnership firms are devised in India under the Indian Partnership Act, 1932. Partnership firms are easy to start are is prevalent amongst small and medium sized businesses in the unorganized sectors.
The two types of Partnership firms are:
It is not compulsory to register a Partnership firm but it is advisable to register a Partnership firm due to the added advantages.
Partnership firms are built by drafting a Partnership deed amongst the Partners.
Number of Partners?
A partnership firm must have at least two partners and in the banking business can have up to 10 partners, in case of any other business can have up to 20 partners. The profits and losses of the partners can be divided equally or unequally.
Characteristics of a partnership Firm -
Essential Documents for partnership firm are as follows :
1. Address and ID Proof of the Partners like Pan Card/Passport/Voter ID/Aadhar Card/Driving License Copy of the Partners.
2. One Business Place Address proof :-
Rented Property : Need Rent Agreement and NOC from Landlord.
Owned Property :- Need Electricity Bills or any other Address Proof.
Please Note: Business place and home place can be same.
Residential Address can be office address for registration?
Yes, the partner's residential property (home address) can be used for the registration. only the proof of registration like electricity bill copy or rental agreement or no objection certificate (NOC) etc. is required.
Explain NOC (No Objection Certificate) in case of rented or own property?
If the electricity bill copy is on another person name then the NOC i.e is owner don't have any objection on commercial activity is required.
Can working Employees register on family member name?
Yes, you can register your family member name. Only above mentioned basic documents are required for online partnership firm registration.
Capital required for starting a partnership firm?
You just have to deposit the capital amount which is required to maintain your current bank account balance.
Partnership Firm is Unregistered Legal Entity, why ?
Partnership firm is registered under the Indian partnership act only with the Registrar of firms. After the introduction of LLP Registration in India most of the people don't register the partnership firm with the Registrar of Firms due to expensive cost.
Annual compliance or yearly maintenance of the partnership firm:
Generally there are only 2 annual compliance for the partnership firm:
Business Partnership Income Tax Return
Personal Income Tax Return
Business GST Return Filing
The annual cost is around 4000 -5000/- p.a.
Can a partnership firm be converted into the private limited company?
Yes, by setting up a new private limited company.
How to Register a Partnership Firm Step by Step :
Step 1 - Choose a name for the Partnership Firm
Choose the name which is not a trademark or copyright or not registered as private limited company. MCA Website or Trademark search website can be used accordingly to know about the registered brand names. Avoid using words like Crown, Emperor, Empress, Empire or any such words because the government approval is required for the same.
Step 2 – Creation of Partnership Deed
Partnership deed is an agreement between the partners where all the terms and conditions are mentioned regarding the partnership firm. Its always in the written format with stamp paper & notarized.
It includes following things -
1. Name of the Firm.
2. Address of the registered office of the Firm.
3. Description on the nature of the business.
4. Profit Sharing Ratio between the partners.
5. Name & Full Address of all Partners.
6. Salary Amount if any, paid to the Partners.
7. Capital Contribution by each Individual Partner.
Apart from these, the rules regarding the admission of the partner & retirement, death etc are also required.
Step 3 : - Registration of Partnership Deed in India :
Partnership Deed Registration with the Registrar of Firms are optional but still, if need the registration then you can follow the below documents to register with the Registrar of Firms -
1. Registration of Partnership Application in Form No. 1
2. Duly filled specimen of Affidavit
3. Certified True Copy of the Partnership Deed
4. Proof of Ownership of the principal place of business or rental/lease agreement thereof.
Once your application is submitted to the registrar by signing the application, they will check all the points and terms for the same. If satisfied then record the partnership firm name in the register which is maintained by the ROF.
Any person can find the details of any firm in the registrar of firms by payment of prescribed fee.
If anyone case your application reject then you have to full-fill the requirements the resubmit the same.
You can simply go with the MSME Registration Act instead of the ROF and open your bank account & start your business
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