Partnership Firm Registration in India

Overview- About Partnership Firm

A partnership firm is a type of business organization in which two or more individuals come together to carry on a business venture. In a partnership firm, the partners share the profits and losses of the business according to their agreed-upon terms. The partners are also jointly and severally liable for the debts and obligations of the partnership. A partnership firm is formed by a partnership agreement, which outlines the terms of the partnership, including the roles and responsibilities of each partner, the profit-sharing ratio, and the duration of the partnership. This type of business structure is popular among small businesses and professional services firms, such as law firms, accounting firms, and consulting firms.

Features of Partnership Firm

Mutual trust and confidence

A partnership firm is based on mutual trust and confidence between the partners, who must work together to achieve common business goals.

Shared ownership

A partnership firm is jointly owned by two or more partners who share the profits and losses of the business.

Dissolution

A partnership firm can be dissolved by mutual agreement or in accordance with the terms of the partnership agreement.

Flexible management structure

A partnership firm can be managed by the partners themselves or by a designated partner or manager.

Sharing of profits and losses

The profits and losses of a partnership firm are shared among the partners in proportion to their agreed-upon profit-sharing ratio.

Unlimited liability

Partners in a partnership firm have unlimited liability for the debts and obligations of the business, which means that their personal assets can be used to pay off business debts

Mutual agency

Partners in a partnership firm act as agents for each other and can bind the firm to contracts and agreements.

No separate legal entity

A partnership firm is not a separate legal entity, which means that the partners are personally liable for the debts and obligations of the business.

Partnership Firm Registration process

• Choose a Unique Firm Name Choose a unique name for the partnership firm.
• Partnership AgreementThe next step in registering a partnership firm is to draft a partnership agreement. This document outlines the terms of the partnership, including the roles and responsibilities of each partner, profit sharing ratio, and the duration of the partnership.
• Obtain PAN and TAN The next step is to obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the partnership firm.
• Application for registration Once the partnership agreement is drafted, and the name is selected, an application for registration of the partnership firm must be submitted to the Registrar of Firms.
• Documents required The application for registration of the partnership firm must be accompanied by several documents, including a partnership deed, address proof, and identity proof of the partners.
• Payment of registration fees A registration fee must be paid at the time of submitting the application for registration of the partnership firm.
• Registration certificate After verifying the application and accompanying documents, the Registrar of Firms will issue a Certificate of Registration for the partnership firm

Type of partners in partnership

Active PartnersActive partners are those who are involved in the day-to-day operations of the business. They are responsible for making business decisions, managing employees, and handling finances. Active partners are also liable for the debts and obligations of the partnership firm.

Sleeping Partners:Sleeping partners are those who invest in the business but are not involved in the day-to-day operations. They do not participate in decision making or have any management responsibilities. However, they are entitled to a share of the profits and losses of the partnership firm.

Nominal Partners:Nominal partners are those who lend their name and reputation to the partnership firm. They do not contribute any capital or participate in the management of the business. Nominal partners are often used to lend credibility to a business or to satisfy legal requirements.

Partner by Estoppel:A partner by estoppel is not actually a partner in the business but is held out to be one by the actions or statements of the other partners. This can occur when a non-partner is represented as a partner in business dealings, leading others to believe that they have authority to act on behalf of the partnership firm.

When registering your partnership firm, it’s important to clearly define the roles and responsibilities of each type of partner in the partnership agreement. This will help avoid misunderstandings and disputes down the line. At [company name], we can help you draft a comprehensive partnership agreement and guide you through the partnership firm.

Importance of Registration of Partnership deed

• Legal recognition: Registering your partnership firm provides legal recognition to your business, making it easier to conduct business transactions, open bank accounts, and enter into contracts.
• Credibility: Registering your partnership firm adds credibility to your business and can increase customer and supplier confidence in your operations.
• Tax benefits: A registered partnership firm is eligible for certain tax benefits, such as deductions and exemptions, which can help reduce the tax burden on the business.
• Better access to funding: Registered partnership firms have better access to funding options such as loans and investment, as investors and lenders are more likely to consider a registered business as a viable investment opportunity.
• Brand protection: Registering your partnership firm can help protect your brand name and prevent others from using it without your permission.

Why Fastlegal

Why Fastlegal We make it easier for entrepreneurs to get their partnership firm registered online from the comfort of their home. With Fastlegal, you can get your partnership firm registration done in just 7-10 working days. We provide a comprehensive package that includes not only the registration process but also guidance through the entire process. This includes company partnership agreement drafting, review and approval of partnership deed, getting the company registered with the Registrar of Firms, and more. Additionally, we also offer post-registration services like GST registration, filing of annual returns, and maintenance of statutory records.