Written by : Rajiv Singh
A Chartered Accountant in UK with 15+ years of experience in FinTech Consulting, Accounting & International Taxation. I enjoy being a Social, Foodie and Father of two young children, reachable at linktr.ee/RajivSingh.
Partnership firms come to existence when two or more people agree to share profits and losses of the firm in a shared ratio and as per a signed agreement. There is less compliance to partnership firms as compared to other types of companies in India. Thus, this is one of the most preferred types of business entities in India. Establishing these firms is easy as it does not require a lot of documentation. All one needs is a partnership deed, and they are ready to proceed forward.
The Indian Partnership Act, 1932 regulates the registration and operational aspects of partnership firms in India. It is also not essential for partnership firms to register themselves with the Registrar. However, the registration of a partnership adds a level of legal security to the firm. This measure comes in handy during settlement claims internally amidst partners or with third parties.
Let's look at the partnership registration procedure coupled with some advantages and disadvantages of functioning as a partnership firm in India.
With the world shifting its base into the virtual realm, many Indian states have also switched their registration process to the online mode. If you plan to establish your firm in such Indian states, you can fill it online or continue following the offline procedure.
The online firm registration commences with an application to the Register of Firms. The steps in the registration process include:
Okay, so the most important step while registering your firm is to choose an appropriate name. It would be best if you avoided a name that is already prevailing in the market. The name should not be an imitation of any other firm or company's name in a similar business as the proposed partnership firm. The selection of such a pre-existing name could lead to the rejection of your firm registration application. Thus, choose something unique and apt to your business. You can check the availability of your partnership firm's name on the Ministry of Corporate Affairs official website.
A partnership deed is absolutely essential. The deed has information regarding the partner's remuneration and profit-sharing ratio. It also covers details related to the responsibilities of every partner along with their rights in the firm. The data available in the deed helps the Registrar find all the necessary information.
Ideally, the partnership deed must slate out the following information, which is submitted to the Registrar of Firms:
The Partnership firm needs a current bank account and a PAN (Permanent Account Number) in its name issued by the Income Tax Department. This step is a requisite to ensure payment of necessary tax liabilities as and when leviable.
Once all the backend work of choosing a name, getting a bank account, PAN card, and drafting the partnership deed is complete, it's time to get in touch with the Registrar. This process could be done online or offline. This depends on the location of your company. You will have to check it before you apply. Fill the form with the Registrar either online or through offline mode. The application comprises general information regarding the partnership firm. It includes details such as the name of the firm, nature of your business, personal information of all the partners, and date of commencement of the entity.
Here's what you need to submit for Partnership firm registration:
The process of Partnership firm registration is incomplete without the payment of the dues. These fee and stamp duties change according to the place. You must pay these along with the submission of the entire documents. Once this is done, you can proceed forward to the subsequent step.
To finalize the deed, each partner must sign the form on the stamp paper in front of the notary. The value of the stamp papers will differ from state to state.
The Registrar will study your entire documents, and voila! He will grant you the certificate of Partnership firm registration. You can now officially add "registered" to your company's name.
If you are willing to register your partnership firm, we can guide you on the right track. At Gotaxfile, we can help you draft your partnership deed, filing for Partnership firm registration, and all the relevant compliances. After the firm's registration, you can also allocate your accounting and tax filing worries to our proficient team. We offer mentorship programs that will facilitate you along the way. Please browse through our website for more details related to our premier services. Visit us now!
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