Partnership Firm Registration

A partnership firm is a popular business structure in India because it has many benefits such as easy incorporation, less compliance, quick decision-making, etc. A partnership firm is a form of business entity where two or more partners come together to do business through mutually agreed-upon terms. 

The terms of the agreements must be mentioned in the partnership deed. After the partnership deed is accepted by the partnership registry, only then is the partnership firm registration complete.

Features of Partnership Firm

Following are the features that you have to look forward to if you are applying for online registration of a partnership firm in India:

 

 

• There must be a minimum of two partners and there is no limit on a maximum number of partners as per the Indian Partnership Act, of 1932.
• The partnership firm is created by a contract called a partnership deed.  
• The firm must submit the partnership firm registration form and other subsequent forms to the Registrar of Firms.
• Partners cannot transfer their profits or rights entailing from the partnership without the consent of all partners.
• Partners have unlimited liability in a partnership firm.
• The firm does not have a separate legal status apart from its partners.
• A firm can use any name and it does not

Eligibility Criteria for Partnership Registration in India

The following are the eligibility criteria for registering a partnership in India:

• There is a minimum of two partners
• The partners may or may not share the responsibilities of the business.
• Risk is shared in a partnership form
• All the partners should agree to the terms mentioned in the partnership deed.

Rights and Liabilities of Member Partners

As per the mutual partnership agreement:

• A member partner is not entitled to receive remuneration for participating in the conduct of the firm's business.
• The member partners are entitled to share equally in the profits earned and contribute equally to the firm's losses, if any.
• For a partner entitled to interest on the capital he subscribes, such interests are payable only out of profits.
• Suppose a member partner makes any payment or advances for the business beyond the amount of capital he has agreed to subscribe to. In that case, he is entitled to the interest at the rate of 6% per annum.
• The partnership firm can indemnify a partner in respect of payments made and liabilities incurred by him for the following reasons:
  • To properly conduct the business, and
  • To protect the firm from loss, as would be done by a person of ordinary prudence, in his case, under similar circumstances.
• A member partner can also indemnify the firm for any loss caused by his willful neglect in the conduct of the firm's business.

Partnership Deed

• As per the partnership agreement, the firm's property must include all property rights and interest in property originally brought into the firm's stock. The property can be acquired, by purchase or otherwise, by or for the firm. The property can be acquired during the firm's business, including the goodwill of the business.
• Unless the contrary intention appears, property and rights and interest in property acquired with money belonging to the firm must be acquired for the firm.
• Subject to the contract between the partners, the firm's property must be held and used by the partners exclusively for the business.

Profit Sharing Among Partners

As per the partnerhsip arrangement,

• If a partner derives any profits for himself from any transaction with the firm, he must account for the profit and pay it to the firm.
• If a partner carries on any business of the same nature or competes with the firm, then he must account for and pay all profits to the firm.

Partner as the Firm's Agent

• The act of a partner in carrying on the firm's business binds the firm. The authority of a partner to bind the firm conferred is called his "implied authority."
• The implied authority of a partner does not empower him to do the following:

1. 1. Submit a dispute relating to the business of the firm to arbitration
   2. Open a banking account on behalf of the firm in his name
   3. Compromise or relinquish any claim or portion of a claim by the firm
   4. Withdraw a suit or proceeding filed on behalf of the firm
   5. Admit any liability in a suit or proceeding against the firm
   6. Acquire immovable property on behalf of the firm
   7. Transfer immovable property belonging to the firm
   8. Enter into a partnership on behalf of the firm

Documents Required for Partnership Registration in India

The documents provided in the table should be submitted to the Registrar for Registration of Partnership Firm in India:

Process for Partnership Registration in India

The partnership firm registration should be done in the state where the firm is situated. For example, if the firm is in Delhi, then the application must be submitted to the Registrar's Office of Delhi. The registration application must be signed and verified by all the partners. The partnership firm registration process of registration is both online and offline. The following is a registration process which must be followed by an applicant to register a firm online on the Registrar of Firms portal.

Step 1: Choose a Name for the Partnership Firm

The name of the partnership firm can be different from any existing company which is already in the public. However, the name must be unique and you can check the details here.

Step 2: Draft a Partnership Deed

A partnership deed is an important document for the registration of the company and it must include the following details to show the registrar.

1. Name and address of the company and all partners
2. Contact details of partners
3. Nature of the business
4. Duration of the partnership
5. Profit/Loss sharing ratio
6. Rules regarding the solvency of the firm
7. Information on capital to be contributed by each partner

Step 3: Apply for a PAN Card

The firm must apply for the Permanent Account Number to the Income Tax Department. So, it can be applied based on a current account in the name of the firm. A PAN Card is important for fulfilling the obligations of paying taxes. 

Step 4: Fill Registration Application and Submit Documents

The application must be submitted to the registrar and inform about the name of the company, nature of business, address, name and address of partners, and date of commencement of business. Along with the application, submit the documents to the registrar's office.

Step 5: Pay Partnership Firm Registration Fees and Stamp Duty

Registration fees and stamp duty need to be paid to the registrar. The partnership registration online fees can vary from state to state. Partnership firm registration will not be complete until the fees get paid.

Step 6: Finalize Partnership Deed Registration

To legalise the deed, provide it to each partner in a written format on stamp paper. The stamp paper must be signed by all the partners in front of a notary. The value of stamp duty varies from state to state. The signed copy of the partnership deed registration online can be submitted to the registrar.

Step 7: Certificate of Incorporation from Registrar

After examining the documents, the registrar will issue a partnership registration certificate. After procuring the partnership firm registration certificate, you can start your business operations right away. 

The process of partnership firm name registration is not an easy one. Therefore, the experts of Registrationwala help you in any way necessary. Through our partnership registration facilities, you can start your business as a partnership firm in no time.

 

Note: The partnership firm registration process varies from state to state. In some regions, the registration process is still offline but some states adopt the online registration of partnership firm process.

Our Assistance in Partnership Registration in India

We, at Registrationwala, provide end-to-end solutions for Partnership registration in India. Our services include:

• Collection of basic information.
• Drafting the partnership deed.
• Reviewing the application and making changes if needed
• Submitting the final deed and filing the partnership registration application.

Registrationwala.com is a leading legal consultancy firm providing comprehensive services relating to partnership registration. Our expert team will provide you with the full-fledged assistance required for the seamless registration of a Partnership firm.

Frequently Asked Questions 

Q1) Can you transfer shares in a partnership firm?

Yes, shares can be transferred in a partnership firm but it is subject to the terms of the partnership deed. However, conventional terms state that share transfer can only occur after receiving the consent of all the partners.

 

Q2) How do partners in the partnership firm get paid?

Partners get paid by withdrawing funds from the earnings of the firm. 

 

Q3) Are profits equally shared among the partners?

Profits are shared among the partners in a partnership firm as per the partnership deed. If it states in the deed that profit shall be shared equally among the partners, then that shall be the case.

 

Q4) What is Form E for a partnership firm?

Form E is required to be filed as an undertaking under section 63. This must be filed in case of any change in the constitution or Dissolution of the firm. After filing Form E, the same should be printed on the green ledger paper signed by all partners and then submitted to the Registrar of Firms with relevant documents.

 

Q5) Is GST mandatory for partnership firms?

Yes, the partnership firms have to file the GST returns if the annual turnover exceeds Rs. 20 lakhs. Usually, the firms have to file GSTR-1, GSTR-3B and GSTR-9 returns.

 

Q6) Can the certificate of registration be revoked?

In some cases, the certificate of partnership can be revoked at the time of dissolution. Also, it can be revoked if any partner is declared insolvent or if the firm is carrying out unlawful activities.