Partnership Registration in India:
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Partnership Registration: Introduction
A Partnership Firm is a legal entity created and governed by the Indian Partnership Act of 1932. A “Partnership” is defined in the Act as a relationship between two or more individuals who have agreed to share the profits and liabilities of a business. These people are known as “partners,” and the firm they run in “Partnership” with one another is known as a Partnership Firm. Partnership Deed serves as the foundation for the formation of a Partnership Firm. It is an agreement in writing that contains all of the terms and conditions that the partners have mutually agreed upon.
Partnership Registration Fees
Documents Required for Partnership Registration
Documents of Partner’s
- Pan card & Aadhaar Card
- Photograph of all partners
- ID Proof & Address Proof
Registered Address documents
- Rent Agreement or Property Tax Receipt or any Legal documents
- NOC from owner of Premises
Basic Requirement to Start Partnership Firm
Minimum Person
A minimum of two partners is required to start a Partnership Firm. The maximum number of partners allowed for a partnership firm in India is twenty partners. However, no foreigner is allowed as partners in the partnership firm.
Capital Requirement
There is no minimum or maximum capital prescribed under the Partnership Act 1932. You can keep the capital of the firm as per the business requirements. The stamp duty on the deed depends on the capital and the state.
Unique Name of Firm
You should select the name of the partnership firm that is unique & which reflects the main business activity. Ensure that the proposed name is not the same or similar to any existing business or trademark registered or applied.
Business Address
Address at which the firm carries on its usual business or maintains its books of account is known as its Principal Place of Business. The latest proof of the place of business along with a NOC from the premises owner is required.
Benefits of a Partnership Registration
- Minimum Compliance
For general partnerships, there is no need for an auditor to be appointed or, if the company is still in the process of registration or is still unregistered, annual accounts filing with the registrar is not necessary either. Annual compliances are also lower when compared to an LLP.
- Simple To Begin
A general partnership can be formed within 2-4 business days, with an unregistered deed of partnership. However, registering for the event offers its own set of benefits.
- Comparatively Economical
A general partnership is substantially less expensive to start than an LLP. It will still be cost effective in the long term because the compliance needs are minor.
Partnership Registration Process
Step 1: Choose a name for your partnership firm:
The first step in partnership firm registration is to choose a unique name for your firm. The name should not be the same as an existing partnership firm or company, and it should not violate any trademarks or copyrights.
Step 2: Prepare a partnership deed:
The next step is to prepare a partnership deed, which outlines the terms and conditions of the partnership. The partnership deed should include the following details:
- Name and address of the partnership firm
- Name and address of all partners
- Nature of the business
- Capital contribution of each partner
- Profit-sharing ratio among partners
- Responsibilities and duties of each partner
- Dissolution and retirement terms
Step 3: Obtain a PAN card:
Partnership firms need to obtain a PAN (Permanent Account Number) card from the Income Tax Department. The PAN card is used for tax purposes and is required for opening a bank account and obtaining other necessary licenses.
Step 4: Register for GST:
If the partnership firm’s annual turnover is more than Rs. 20 lakhs, it is mandatory to register for GST (Goods and Services Tax). GST registration is done online, and the partnership firm will receive a GSTIN (Goods and Services Tax Identification Number) after successful registration.
Step 5: Obtain other necessary licenses:
Depending on the nature of the business, the partnership firm may need to obtain other necessary licenses and permits, such as a trade license, shop and establishment license, or a professional tax registration.
Step 6: Register your partnership firm:
Once you have completed all the above steps, you can register your partnership firm with the Registrar of Firms in your state. To register your partnership firm, you need to submit the following documents:
- Partnership deed
- Address proof of the partnership firm
- Address proof of all partners
- PAN card of the partnership firm
- PAN card of all partners
- Registration fee
After submitting the documents, the Registrar of Firms will verify the documents and issue a Certificate of Registration. The partnership firm is now legally registered, and you can start your business operations.
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FAQ on Partnership Registration
Partnership registration refers to the formal process of registering a partnership firm with the Registrar of Firms. This process is governed by the Indian Partnership Act, 1932, and involves submitting necessary documents and an application form to the relevant authority in the state where the firm operates.
No, partnership registration is not mandatory in India. It is optional and at the discretion of the partners. However, registering a partnership firm is advisable as it provides legal recognition and allows partners to enforce their rights in court, which unregistered firms cannot do.
- Legal Recognition: Registered firms can file lawsuits against third parties.
- Claim Set-Off: They can claim set-offs against third-party claims.
- Easier Transition: It is simpler to convert a registered partnership into another business structure if needed
The registration process generally takes about 10 working days, subject to state-specific processing times and departmental approvals.
Yes, a partnership firm can operate without registration. However, unregistered firms face limitations in legal matters and cannot enforce contractual rights against third parties.
If there are changes in partners or capital contributions, these must be documented in the partnership deed. If the deed is registered, any changes should also be notified to the Registrar of Firms.
Comparison among different type of Business Registration Options in India
| Features | Private Limited Company | OPC | LLP | Partnership | Sole Proprietorship |
| Applicable Law | Company Act 2013 | Company Act 2013 | LLP Act 2009 | Partnership Act 1932 | No Law |
| Number of members | 2 – 200 | 1 | 2 – Unlimited | 2 – 20 | 1 |
| Number of Directors /DP | 2 – 15 | 1-15 | 2 – Unlimited | 1-20 | 1 |
| Formation | Through ROC | Through ROC | Through ROC | Through Agreement | Easy |
| Tax Benefits | The income tax rate for companies vary from 15 % to 22% | The income tax rate for companies vary from 15 % to 22% | LLP Income Tax Rate is 30% on its profits | Partnership firms are taxed at 30% on its profits | For a small business with low turnover, there is the benefit of individual tax slabs. |
| Statutory Compliance | High | High | Low | Low | Minimum |
| Foreign Investment (FDI) | FDI in case of a Private Limited Company is available under the automatic route. | FDI is not allowed in One Person Company | FDI in LLP Is permitted at par with the companies | FDI not Allowed | FDI not Allowed |
| Separate Legal Entity | A Company is a separate legal entity separate from its promoters | An OPC is a separate legal entity separate from its promoters | An LLP is a separate legal entity separate from its promoters | A Partnership is a legal entity but not different from partners | The proprietor and the proprietorship business is the same thing |
| Limited Liability | Liability Limited – Shareholders of a Company are bound to pay only up to the capital they have subscribed to the company. | Liability Limited – In OPC, unlike a proprietorship, the shareholder cannot be asked to pay beyond his subscribed capital | Liability Limited – The partners of an LLP can be called upon to pay only up to the amount of capital they subscribed to. | Liability Not Limited – There is no protection of limited liability, even the personal properties of partners are at risk for losses of business | Liability Not Limited – The proprietor is the whole sole of the business, and his liability to the debts or losses of proprietorship is unlimited. |
| Ownership Transferability | The shareholding of a Pvt Ltd Company is easily transferable | OPC Shares can be transferred to new shareholder along with the nominee | In LLP contribution/share of a partner can be transferred with the consent of all other partners. | Not Possible, every admission or removal of a partner amounts to the new firm. | Not Applicable |
| Perpetual Existence | A Company exists beyond the life of its owners /shareholders. After the death, the shares transmits to legal heirs | OPC Continues to exist even after the death of its only shareholder, as it passes to the nominee. | The LLP also have perpetual existence and exists beyond the life of the designated partner | No perpetual existence, with the death of a partner, the partnership ends. | No perpetual existence, with the death of the proprietor, it ends. |
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