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Partnership Firm Registration in India - Overview

A Partnership Firm is a corporate structure which is managed by two or more people and is operated in accordance with the partnership deed's provisions and objectives. This structure is thought to have lost its relevance since the introduction of the limited liability partnership (LLP) as the partners in a partnership firm have is liable to unlimited liability, which implies that they are personally liable for the debts of the business. Registration of Partnership Firms in India is regulated under the Partnership Act, 1932. The low costs, ease of setting up, and minimal compliances make the Partnership Firm Registration a suitable choice for entrepreneurs.

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Partnership Firm Registration Package

Rs.2,850/-+18% GST

  • What we provide
  • Documents required
  • Drafting of Partnership Deed
  • PAN Card Registration
  • MSME Registration
  • Name of the Firm
  • Object of the Firm
  • Aadhaar card of Partners
  • Any Special Terms & Conditions
  • % of Share Distribution
  • Monthly Remuneration
  • Address Proof of the Registered Office (Rent Agreement, Receipt, Electrical Bill, Owner Property tax)
  • Passport size photos of Partners
  • Email and Mobile No. of the Partners

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Partnership Firm Registration Process in India

The Partnership Firm Registration process involves the following steps.

Step 1: Choose the name for the firm

The first step is to select a name that does not resemble the name of any other existing firm.

Step 2: Draft a Partnership Deed

The partnership deed is the most important document for the registration of the company as it gives the following necessary information to the Registrar.

  • Name of the partners
  • Address of company
  • Contact details of partners
  • Nature of the business
  • Duration of the partnership
  • Profit/Loss ratio
  • Rules for solvency of the firm
  • Capital Contribution of the partners

Step 3: Apply for a PAN Card of the firm

A firm, irrespective of registration under the Act, is required to mandatorily apply for a Permanent Account Number to the Income Tax Department. This can be applied on the basis of a current account opened in the name of the firm.

Step 4: File a Registration Application

Next step is to file a registration application mentioning all the relevant details regarding the business. This is to be submitted to the Registrar in the region of the firm’s registered office.

Step 5: Submission of Necessary Documents

Along with the registration application, the following documents are to be submitted to the Registrar:

  • Application for registration of partnership (Form 1)
  • A certified original copy of partnership deed
  • Specimen of Affidavit
  • PAN Card in the name of partnership firm
  • Proof of address of the firm, ownership deed, lease and rent agreements, etc.
  • PAN cards and address proofs of all the partners

Step 6: Pay the Fees & Stamp duties

A registration fee and a stamp duty are required to be paid at the time of the submission of the documents with the Registrar. The fees may vary across states.

Step 7: Deed Finalization

To legalize the Deed, it should be shared with each partner in a written form on a stamp paper. One stamp paper deed should be duly signed by all the partners in front of the notary. The value of the stamp varies across states. The signed copy is then submitted to the Registrar.

Step 8: Issuance of Certificate from the Registrar

The registrar, after complete verification, will issue the registration certificate.

The firm will thus be on record in the Register of Firms. On the date of this entry, the firm shall be deemed registered. The partnership firm is required to add ‘Registered’ after its name from the date of registration.

Partnership Firm Registration - Advantages

Minimum Compliance

A partnership has very little regulatory compliance. For general partnerships, there is no need to appoint an auditor. There is no requirement for annual accounts filing with the registrar. A partnership may be unregistered but it may get registered to avail the legal benefits. Even the annual compliances are lower when compared to an LLP.

Simple To Start

A partnership firm can be formed within 2-4 business days, with an unregistered deed of partnership. However, registering the partnership firm will enable the firm to avail legal benefits.

Comparatively Economical

A general partnership is substantially less expensive to start than an LLP. It will still be cost effective in the long term because the compliances needs are less

Partnership Firm Registration - Disadvantages

Unlimited Liability

The biggest disadvantage of the partnership firm is that it renders unlimited liability to its partners. The partners have to bear the loss of the firm out of their personal assets. On the other hand, in a company or LLP, the shareholders or partners have liability limited to the extent of their shares. The liability created by one partner of the partnership firm is to be borne by all the partners of the firm. If the firm’s assets are insufficient to pay the debt, then the partners will be laible to repay the debts personally. This makes the partnership business risky.

No Perpetual Succession

The partnership firm does not have perpetual succession, unlike a company or LLP. This means that a partnership firm will come to an end upon the death of a partner or insolvency of all the partners except one. It may also be dissolved if a partner gives notice of dissolution of the firm to the other partners. Thus, the life of a partnership firm is uncertain.

Limited Resources

The maximum number of partners in a partnership firm is 20. This limit in the number of members restricts the total capital contribution in the firm. The capital of the firm is the sum total of the amount invested by each partner. Thus if the total investment turns out less then it will be difficult for the partnership firm to take up large scale business.

Difficult to Raise Funds

Since the partnership firm does not have perpetual succession and a separate legal entity, it is difficult to raise funds. The firm does not have many options for raising capital and growing its business as compared to a company or LLP. As there are no strict legal compliances, people have less trust in the firm. The accounts of the firm need not be published. Thus, it makes it difficult to finance from third parties.

Documents Required for the Registration of a Partnership

Following are the documents required for Registration of Partnership Firm:

  • Application for registration of partnership (Form 1)
  • Certified original copy of partnership deed
  • Specimen of an affidavit certifying all the details mentioned in the partnership deed are correct
  • PAN card and address proof of the partners
  • Copy of Registered Office Address
  • ID Proof of all partners

Timeframe for Partnership Firm Registration in India

The time taken for incorporation of Partnership Firm is about 10 to 15 days. The time varies from state to state and also depends on the time taken by governmental bodies involved in approval of filings.

Partnership Firm Registration Fees in India

The Partnership Firm Registration Fees ranges from Rs. 3500 to Rs. 7500. Amount varies on a number of factors like the state where it is to be formed and other changes in Governmental cesses and charges.

Why choose TAX SEVA KENDRA

At TAX SEVA KENDRA, We provide high quality service for Proprietorship Firm Registration online.

You get access to reliable and experienced professionals and can coordinate with them to fulfil all your legal requirements. You can also track the progress on our online platform, at all times.

By handling all the paperwork and other requirements, we ensure a seamless interactive process with the government. We ensure 100% transparency in our activities.

We own a team of experienced business advisors and legal professionals to give you all the assistance you need.

Frequently Asked Questions

Is a partnership firm a separate entity?

A general partnership firm does not have a legal identity. Any legal issues or debt incurred by the firm is the responsibility of its owners/the partners.

How many partners can there be?

Minimum 2 partners and maximum 20 partners.

How much time does it take to register a partnership firm?

The registration of a partnership firm in India can take up to 10 to 15 working days. However, the time may vary as per the regulations of the concerned state. The registration of a partnership firm is subject to government processing time which varies from state to state.

Who can be the partners in a partnership firm?

Individuals residing in India can only become partners or members in a partnership firm.

What is the capital amount needed for the partnership firm in India?

There is no minimum capital requirement for a partnership firm in India.

Does Partnership have a separate legal identity?

The Partnership firm and the partners are the same in the eyes of the law.

Is it necessary to file Income tax returns?

A Partnership Firm must file tax returns.

Can a partner transfer ownership in a partnership firm?

There are restrictions on the transfer of ownership in a Partnership Firm. A Partner cannot transfer his or her interest in the firm to any person without the approval of all other partners.

Can Partnership be converted into LLP or a Company?

Yes, a Partnership firm can be converted to a Company or LLP.

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FAQ
Q.What is a Partnership Business?

A. Partnership Business is an activity where multiple people collectively contributed capital and resources to form a business. Here all partners are treated as owner of the business and percentage of profit and risk of each partner is determined in the Partnership Deed.

Q. Why Partnership Firm need to be registered?

A. As per partnership act registration is not compulsory but due to following reason partnership firm is required to registration

- Without registering the firm partners have no right to file case in any court.

- Without registering the firm partners have no right to file case in any court.

Q. Does a partnership firm be liable in the name of the firm?

A. Yes. A partnership firm is liable in its own name. The firm has separate legal identity from its partners. Here partners do not enjoy limited liability as compared to LLP or a company. In case, a firm not able to discharge its liability, the partners will be called to remit the balance liability on behalf of firm