Partnership Firm Registration

Introduction

Welcome to your CorpIQ guide on Partnership Firm Registration in India! partnership firm is a popular choice among entrepreneurs. Setting up a partnership firm in India is straightforward, but ensuring all legalities are correctly handled is vital. Registration adds credibility and provides legal protection to the firm's operations. Through this guide, you'll learn the essentials of registering your partnership firm in the Indian business ecosystem.

Meaning of Partnership:

 As per Section 4 of the Indian Partnership Act, 1932, Partnership is the relation between partners, who have agreed to share the profits of a business, carried on by all or any of them acting for all”.

Why Register a Partnership Firm?

• Legal Recognition: A registered firm is recognized by law, safeguarding your business operations.
• Ease of Litigation: In case of disputes, registered firms have a smoother process in courts.
• Credibility Boost: Financial institutions and stakeholders perceive registered firms as more trustworthy.

 

Partnership Deed:

It is a document that outlines the rights and responsibilities of all partners to a business operation. It is designed to guide the partners in the conduct of the business. It helps in preventing disputes and disagreements between the partners. Partnership deed is also known as a partnership agreement.

The elements of a Partnership Deed are listed below:

• Duties, Powers and Obligations of the partners
• Dissolution: The partnership deed must contain the methods by which the business of partnership will be dissolved.
• Accounting: The partnership deed contains the accepted method of accounting for the cash flow and profit and loss.
• Arbitration: To avoid expensive litigation, a partnership deed must contains the means of arbitration.
• Expulsion
• Withdrawals

 

Registration of Business Entity:

To start a business, it is necessary for every entrepreneur to decide the suitable form of business organisation through which they wish to carry out their business. The business entity that they could seek for are following:

S. No.	Form of Business Entity	Law under which Registration is required
1.	Proprietorship	Not required
2.	Partnership	Not compulsory but can be registered under the Partnership Act, 1932
3.	Public Company	The Companies Act, 2013
4.	Private Company	The Companies Act, 2013
5.	One person company	The Companies Act, 2013
6.	Limited Liability Partnership	The Limited Liability Partnership Act, 2008

 Types of Partnership:

Mainly, there are three types of partnership:

(i) Partnership at-will: The partnership which exists on the will of the partners. That kind of partnership comes brought to an end whenever any partner gives notice of his intention to do so.

(ii) Particular partnership: The Partnership which is formed for carrying out a particular venture. It comes to an end automatically on completion of the venture.

(iii) Partnership for a fixed duration: The Partnership which is for a fixed period of time, it may be for 2 years, 5 years or any other duration.

Types of Partners:

• Active Partners: Those partners who take active part in the day-to-day business of the firm.
• Nominal Partners: Those partners who do not have interest in the business but lend their name to the firm.
• Partners by holding out: If a person through his words or conduct holds out to another that he is a partner, he will be prevented from denying the fact that he is not a partner.
• Dormant or sleeping partners: Those partners who do not take active part in the management of the business.

 

DOCUMENTS REQUIRED FOR REGISTRATION

• Certified copy of the Partnership deed. The deed should be on stamp paper in accordance with the Indian Stamp Act.

• Proof of Business Address: Could be a rental agreement, utility bill, or ownership document.

• ID Proof of Partners: PAN cards, Aadhaar cards, or other government-issued IDs.

• Affidavit: Stating the intent to start a partnership business.

• Application for Registration should be made in the prescribed Form -1

Once the Registrar of Firms, is satisfied that all the requirements of the law has been duly complied with, he shall record an entry of the statement and issue a Certificate of Registration.

STEPS TO REGISTER YOUR PARTNERSHIP FIRM

• Drafting the Partnership Deed: Create a comprehensive document outlining roles, responsibilities, profit-sharing ratio, and other operational rules among partners.

• Choosing a Firm Name: Ensure the name isn't too similar to any existing business and doesn't infringe on trademarks.

• Application Submission: Submit the application for registration to the Registrar of Firms of the respective state.

• Document Attachments: Attach necessary documents like proof of address of the firm, IDs of partners, and the partnership deed.

• Registration Certificate: Once approved, the Registrar issues a certificate of registration, and your firm is good to go!

 

PROCESS OF REGISTRATION OF PARTNERSHIP:

In India, Partnership firms are governed by the provisions of the Indian Partnership Act, 1932. However, there is no compulsion to register the partnership firm as there is not such any penalty specified for non-registration.

For the registration of the partnership, the applicant need to file an application with the Registrar of Firms of the area in which the business is located.

(i) The application for registration of partnership must include the following details, namely;-

• name of the firm ,
• Place where the business is carried on,
• Date on which partners joined the firm,
• Name and address of the partners and
• duration of the firm.

The Application should be signed by all the partners of the firm or by their duly authorised agents. Every partner is required to verify and sign the application.