Summary
We at VGC can help you register your Partnership Firm Registration.
A partnership firm is one of the most important forms of a business organization. A minimum of two persons are required to establish a partnership firm. A partnership firm is a firm where two or more persons come together to establish a business and divide its profits among themselves in agreed ratio.
In India the partnership firm registration is done under the Indian partnership act 1932.To register a partnership firm the partners must first agree on terms and conditions of partnership and create a partnership deed which is a legal document that outlines the rights and responsibilities of each partner.
Once the partnership deed is created the partners must submit an application for registration of the partnership firm to the registrar of firm in the state where the firm is located.
Upon verification of application and documents the registrar of firm will issue a certificate of registration, which confirms that the partnership firm is legally registered and can commence its business.
Documents
Documents Required for Partnership Firm Registration
1. Partnership deed = partnership deed is a legal document that outlines the terms and conditions of the partnership, including the nature of business, profit sharing ratio, capital contribution. it contains the rights and duties of each partner.
2. Documents of firm
a) PAN CARD =
Partners must provide their PAN cards, which are issued by income tax department, to register the partnership firm.
b) Address proof =
Partners must provide address proof such as Aadhaar Card, Passport, Driving license etc.
c) Identity proof =
Partners must provide their identity proof such as Aadhaar card, passport, driving license etc.
d) Rental agreement =
If the registered office place is rented, rent agreement and one utilitybill ( electricity bill, water bill etc.) have to be submitted also NOC from landlord will be submitted.
e) Bank Account Proof =
The partners must provide a bank account statement or a cancelled cheque to prove that they have a bank account in the name of partnership firm.
f) Photographs =
The partners must provide their passport sized photographs for the registration process.
Procedures
Procedures of Partnership Firm Registration
1. Selection of Name of the Partnership Firm
The partners must choose a unique and suitable name for the partnership firm that is not already use in by any other business entity.
2. Partnership Deed
The partners must create a partnership deed that outlines the terms and conditions of the partnership, including the nature of business, profit sharing ratio, capital contribution and rights and duties of each partner.
3. Obtain PAN Card and Address Proof
The partners must obtain PAN cards and address proof such as Aadhaar card, passport, driving license etc.
4. Obtain NOC from Landlord
If the partnership firm is located in a rented premises , then partners must obtain a No Objection Certificate (NOC) from the landlord.
5. Register for GST (if applicable)
If the partnership firm’s annual turnover is expected to exceed Rs. 20 lakhs, then it is mandatory to register for Goods and Services tax (GST)
6. Prepare and file the Application for partnership firm Registration
The partners must prepare the application for partnership firm registration, which includes partnership deed, PAN card, address proof, NOC from landlord and bank account proof.
7. Pay the Required fees
Partners must pay the required fees for partnership firm registration.
8. Obtain the Certificate of Registration
If the Registrar is satisfied with the registration application and documents, he will register the firm in the registrar of firms and issue the Registration Certificate.
Characteristics
Characteristics and Benefits of Partnership
Firm Registration
1. Minimum Members =
Minimum number of partners are two and maximum limit is up to ten in case of banking business and twenty for all other categories of business
2. Partnership Agreement =
A Partnership deed is signed between all the partners entering into partnership business.
3. Competent =
All the partners should be competent to enter into the partnership agreement and not be a minor.
4. Sharing =
The profit and losses are to be shared per the ratio as agreed between the partners or equally if nothing is specified.
5. Unlimited liability =
The liability of partners is unlimited.
Partnership Deed
Partnership Deed is a partnership agreement between the partners of the firm which outlines the terms and conditions of the partnership between the partners. The agreement can be either in written or oral form.
The deed contains the general and specific details.
- Name and address of all the partners.
- Nature of the business firm.
- Capital contributed by each partner.
- Profit and loss sharing ration as agreed upon.
- Date on which business commenced.
- Duties and rights of each partner.
- Method using for calculating goodwill.
- The term or duration of the partnership.
Timeline for Partnership Firm Registration.
The partnership firm registration process usually takes up to 2 weeks or so.
ADVANTAGES AND DISADVANTAGES
Advantages of Partnership Firm
- Easy to start
- Quick decision making
- Sharing of profit and losses
- Raising of funds
- Less compliance
Disadvantages of Partnership Firm
- Unlimited liability
- No perpetual succession
- Instability
- Conflicts and disputes
- Restricted number of partners.
Importance of partnership Firm Registration
The Registration of partnership firm is not compulsory under the Act, it is advisable to register due to its importance and benefits.
- Gives partners the ability to file a case against third parties, and other partners.
- Grants the power to claim set off against any third party claim.
- Its easier and faster to convert into any other business structure if the partnership is registered.