Partnership Firm Registration in India

Partnership firm registration is one of India's most popular business registration types. In order to register a partnership firm, a minimum of two members, known as partners, are required. The partners come together and sign a contract, which is known as partnership deed registration. This deed contains details of capital contribution, profit sharing ratio, and other terms and conditions. Everything regarding the firm's operation and management will be mentioned in this deed. This deed is the fundamental governing document for registering partnership firms in India.

What is Partnership Firm Registration?

The Partnership Act defines the partnership firm and the term partner. Partnership is a kind of relationship between two or more persons who are the partners of the firm, in which they share the profit in a particular agreed-upon ratio with each other. The Indian Partnership Act, 1932 governs the process of Partnership Registration. The Registration process for partnership firms includes obtaining the registration certificate from the firm’s registrar. All the partners in a business are representatives of the firm.

Partnership Firm Registration by its members before the Registrar of Firms is called partnership firm registration in India. It is done through the firm's partners through a contract, which is called a partnership deed. This must be registered before the Registrar has the correct jurisdiction. For instance, a partnership firm with an office in Mumbai cannot be registered in Delhi because the jurisdiction of the Registrar has been decided on the basis of the registered office.

Understanding of Partnership Deed Registration

The partnership deed is one of the most important documents for partnership firm registration, as it governs all aspects of the business and documents the rights and responsibilities of each partner. In this deed, the name and signature of all the partners are present. Also, this deed talks about how the business will run, who owns how many shares, how the business will dissolve, the names of all the partners, etc. This partnership deed needs to be registered for extra security.

Why Register a Partnership Firm in India?

Although it is not at all mandatory to do partnership firm registration in India as per the Indian partnership laws, it is important to register this firm because of the following reasons:

• Legal Recognition:

Registration provides legal recognition to the partnership collaboration as a separate entity which is distinct from its members.

• Evidence of Existence:

It serves as evidence of the existence of the partnership, which can prove to be significant in the case of different types of disputes or legal issues.

• Better Credibility:

A registered firm generally enjoys better credibility as well as trust among business's customers, suppliers, and financial institutions.

• Legal Remedies Access:

It enables partners to sue or be sued in the firm's name, allowing access to legal remedies in case of disagreements or breaches.

Effects of Non-Registration of Partnership Firms in India

Some of the key effects of non-registration of partnership firms in India are discussed below:

• Limited ability to enforce rights in court.
• It is difficult for unregistered firms to get funds for their business.
• The trustworthiness of the firm is comparatively low, which indirectly hampers its business.
• Slow growth and development of the business.

Advantages of Partnership Firm Registration in India

Some of the key advantages or benefits of registering a partnership firm in India are discussed below:

• Easy Formation:

If you delve deep down into the process of partnership firm registration, which is already mentioned below, you come to know that its process is easy in comparison to the formation of the corporate bodies. But easy doesn't mean it can be done by a layman as well. There are a lot of formalities and paperwork which needs to be done appropriately with the help of a professional advisor who is experienced in the similar field.

• Fewer Compliances:

In comparison to the corporate body's compliances provided under the companies act, the compliances of partnership businesses are very less and also not that much heavy fines and penalties levied under the partnership laws. Hence it is one of the most preferred choices of the startups to register their business as a partnership firm. But again one clarification is necessary here which is that it is not suitable for all the startups but for the ones which are in a particular area and are initiated on a smaller level.

• Share of Profit and Loss:

One of the best things about such business entities is that both the profit as well as loss has been shared by the partners among themselves as per their share in the partnership firm. This makes the liability divided among all the partners and makes the shoulders of the form less burdensome. As both the profit as well as loss are going to divide partners' works by putting their hundred percent efforts in the firm.

• Quick Decision Making:

In the corporate bodies in order to take any decision on behalf of the company a board resolution needs to be passed which makes it difficult as well as delay the decision making and sometimes result in loss. But on the other hand all the decision making powers in a partnership firm are in the hands of the partners themselves which can lead to easy and quick decision making. It not only helps in the business growth but also helps in the better management of the firm.

List of Documents Required for Partnership Firm Registration

Some of the key documents required for the Partnership Firm Registration in India are given below:

• A written agreement signed by all partners outlining rights, responsibilities, and profit-sharing ratios, commonly known as the partnership deed.
• PAN, Aadhaar card, or passport of all the members of the firm to provide identity evidence to the Registrar of Firms.
• Utility bill, passport, or Aadhaar card showing the current address of all partners as address evidence for the Registrar of Firms.
• Form prescribed by the Registrar of Firms, duly filled and signed.
• Affidavit from all partners affirming that all provided information is true to their knowledge.

Procedure of Registration of Partnership Firm in India

Step 1: Select a Good Name for the Firm

The very first thing you need to do is choose a good name for the partnership firm. Although you can take any name for your firm as there is no formal procedure of name approval like it is for corporate bodies. But it is suggested to choose a name which is related to your business and suits the needs of the business as well.

Step 2: Collect All the Required Documentation

Before actually starting to prepare for the registration application for the partnership firm, make sure to collect all the required paperwork. If all the documents are ready in advance, it will make your work easy, and you can smoothly prepare the application for the registration.

Step 3: Prepare Application for Registration

As per the official business address proof, you need to understand under which Registrar of Firms your partnership business will fall. This is important because you cannot file an application for registration randomly before any Registrar of Firms. It must be filed as per the jurisdiction of the firm. You need to prepare Form 1, which you can easily get from the Registrar of Firms' office or download from the official website. Once the form is filled, applicants need to attach all the required documentation and submit it to the competent registrar office.

Step 4: Examination of the Registration Application

Once the application has been submitted before the Registrar of Firms, the application will be verified by the Registrar. They will check whether Form 1 has been filled properly with all the required information and if all the documents are complete.

Step 5: Certificate of Registration

After all the above steps, the partnership firm registration certificate will be issued if the applicant passes the evaluation conducted by the Registrar. If there is anything lacking in the application, the Registrar will raise a query, but if that query is not resolved within the stipulated time duration, there are chances that your application for registration may be rejected.

Is it Compulsory to Register a Partnership Firm in India?

As per the laws of India, it is not compulsory to register a Partnership Firm in India. One can run a business in partnership even without registration. However, it is always suggested to register the partnership firm to avoid unnecessary disputes in the future. Registration provides more firmness and security to the business, making it more reliable and credible among customers and investors.

Time Required for Partnership Firm Registration in India

The registration of a partnership firm is completed within a week, which includes the collection of required information, drafting the partnership deed, and getting it notarized.

Partnership Firm Registration Fees in India

The professional fees for the partnership firm registration in India are approximately ₹2,999, excluding any GST and government fees.

Why choose BizFoc?

Bizfoc is an accounting firm which is the best for the Partnership Firm Registration because they are having a team of experienced professionals who not only have experience in the registration of the partnership firms but also have expertise in various other business domains. They will make your work easy and smooth. Hence in order to make sure that your work is done properly choose us

Conclusion

Every business is not suitable for every kind of business hence the very first thing you need to check with the help of an expert is whether your business suits partnership firm registration or not. If the answer is yes only , then you should go for the partnership firm registration. As discussed above the process of registration of partnership is easy and smooth if you take help of an expert professional who is having experience in the similar field. Thus always suggested that for any kind of business registration you must choose an expert like Bizfoc who has an experienced professionals team who will make your work easy and smooth.

Frequently Asked Questions about Partnership Firm Registration