Partnership Firm Registration

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    Partnership Firm Registration

    A Partnership Firm is a popular form of business constitution for businesses that are owned, managed and controlled by an Association of People for profit. The law relating to partnership firm is contained in the Indian Partnership Act, 1932.

    Partnership Firm Registration

    Partnership firms are relatively easy to start are is prevalent amongst small and medium sized businesses in the unorganized sectors. With the introduction of Limited Liability Partnerships in India, Partnership Firms are fast losing their prevalence due to the added advantages offered by a Limited Liability Partnership.

    Partnership Firm Registration

    Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.

    Documents Required

    for Partnership Firm

    ID and Address Proof of Partners like

    Pan Card / Passport/Voter ID / Aadhar Card / Driving License Copy of the Partners.

    One Business Place Address proof

    1. if Property on Rented :- Need Rent Agreement and NOC from Landlord.
    2. if Property is own :- Need Electricity Bills or any other Address Proof.

    3 Simple Steps

    for Partnership Firm

    Advantages

    Of Partnership Firm

    Ease of Formation

    Registration is not compulsory in the case of Partnership firm. It can be formed without any legal formality and expenses. Thus, it is simple and economical to form and operate.

    Larger Resources

    Due to the more number of members, the partnership firm has larger resources for the business operations as compared to sole proprietorship

    Flexibility in Operations

    Due to the limited number of partners, there is flexibility in the operations of business as the partners can amend any objectives or change any operations any time by mutual consent.

    Better Management

    Business of a partnership firm is very well managed by all the partners as they take interest in the daily affairs of business because of the ownership, profit and control.

    Sharing of Risk

    In partnership, every partner bears the risks individually as it is easier compared to sole proprietorship.

    Lesser Compliances Lesser

    Partnership firm are not required to file annual accounts with the registrar unlike LLP or a company.

    Frequently Asked Questions (FAQs)

    What is a Partnership?
    Partnership is an agreement between two or more people to share the profits of a business. The business can be carried on together by all the partners or any one partner representing the others. A partnership can be for a fixed period of time or it may be limited to a specific project or it may be dissolved at will.
    Should a partnership firm be registered?
    Not necessarily. However, unless a partnership firm is registered with the registrar of firms and societies, the rights of the partners inter se or against strangers cannot be enforced in a court of law. If the partnership deed itself creates, transfers or affects an interest in immovable property.
    Is a partnership deed necessary to form a partnership firm?
    No, it is not necessary. However it is often prudent to make a partnership deed to produce to the bank, income tax authorities and to clients with whom the partnership firm deals with.
    What is the Partnership Firm ?
    Partnership firm is an organization of two or more persons managed by anyone or all of them with intention to run business or industry and share the profits.
    What is the maximum and minimum number of persons to form a partnership firm?
    There must be minimum of 2 persons to form a partnership firm. If the firm is intended for financial transactions maximum of 10 and for other purposes maximum of 20 persons can form a firm (See Sec.11 (2) of Company law).
    What should be the duration of a firm?
    Partnership firm may be for any definite or indefinite duration. If no duration is mentioned, it shall be at `will' (See Sec.7 of Indian Partnership Act 1932).
    Is it necessary to form partnership firm through a document only?
    Generally yes. Stamp duty of Rs.100 shall be paid if capital of the firm does not exceed Rs.500 and Rs.500 of capital exceeds Rs.500 for the document.
    Is it compulsory to register partnership firm?
    No. If partnership firm not registered it will lead to the following conseQ uences:
    • It will not be possible to sue one partner against another partner or against the firm and vice versa in the court of law to claim right.
    • Partnership firm cannot sue third party in the court of law for enforcement of it's right (See Sec.69 of Partner ship Act 1932).
    Can a firm or company become partner of another firm?
    A firm cannot become partner of another firm but a company can become partner of a firm
    Who has the authority to register partnership firm? To whom application is to made and in which form?
    District Registrar is Registrar of Firms in his District. Application may be made in Form No.1 for registration (See Sec. 57, 58 of Indian Partnership Act 1932).
    How and in what manner application is to be made for registration of partnership firm? Is there time limit for it?
    Application to be given to the Registrar of the District in which it is intended to be formed. There is no time limit.
    Will certificate of registration be given?
    Acknowledgement will be issued in Form C (See Sec.10)
    Can a firm be given any name?
    Except names like Crown, Emperor, Empress, Imperial, King, Q ueen Royal pr any name signifying authority of Government any name may be given (See Sec.58 of Indian Partnership Act 1932).
    What are the other forms of registration and procedure?
    Change with name, place, opening of branches and closure, change in the partners or change in their address, release of minor's partnership and dissolution of partnership may be registered (See Sec.60, 61, 62 and 63 of the Act).
    Can any person inspect any records, register and obtain copy of it?
    Yes. Any records can be inspected or copy can be obtained on payment of prescribed fees (See Sec. 66 & 67).
    What are the procedures to be proved in an application for registration of a firm?
    Following are the particulars: a) Name of the Firm; b) Main place of business; c) Other places of business; d) Date of joining of each partner; e) Each partner's name and address; f) All the partners or their authorized agents shall sign the application and a gazetted officer, advocate, attorney, pleader or chartered accountant should attest such signatures (Rule 3 of Karnataka Registration of Firms Rules 1954).
    What is the difference between registrations of partnership deed and registration of firm?
    Partnership deed can be written on stamp paper and registered in Sub Registry Office like any other document. In this case only the deed is registered, which does not mean registration of firm. Firm can be registered after following the procedure laid down in Sec.59 of The Indian Partnership Act 1932. Provisions of the Act accrue only on such registration.