Partnership Firm Registration
Partnering for success? TaxAdvisr guides you every step of the way to launch your dream venture with a seamless partnership firm registration process at just ₹499 + govt. fees.
- We handle the legwork, ensuring a smooth and efficient process.
- Stay informed with regular updates and follow-ups.
- Get your partnership firm registration deed drafted within 3 days (terms & conditions apply).
What I loved most about TaxAdvisr was their patience. They listened to our needs, explained every step in simple language, and ensured we were comfortable throughout the process.
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Right plan for Your Business
Customized plans to suit your business needs.Smart Plan
₹1,499 0% off
₹1499
+ Govt. Fee
What you’ll get
- Initial Consultation
- Form submission
- Objection removal
- Issuance of certificate
Pro Plan
₹2499 0% off
₹2499
+ Govt. Fee
What you’ll get
- Initial Consultation
- Form submission
- Objection removal
- Issuance of certificate
- Dedicated consultant
- Notary and witnesses
Customised Plan
₹Custom NAN% off
₹Custom
+ Govt. FeeWhat you’ll get
- Everything in Smart & Pro Plan
- Priority Processing for Faster Issuance
- Additional Legal Documentation Assistance
- Dedicated Compliance Manager for Follow-ups
- More based on Discussion
Note: All prices are excluding GST. Tax & Government fees should be payable directly to the respective government portal. Also, plan is subject to approval after the discussion of scope of work. All rights reserved by Taxadvisr. T&C
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Eligibility for Partnership Firm Registration in India
- Individuals: Anyone who can legally enter into contracts can become a partner. You can even partner with your HUF (Hindu Undivided Family) through its Karta (head).
- Companies: Certain companies, with the approval of their governing documents, can also participate in partnerships.
- Trusts: Trustees of family trusts, religious endowments, etc., can form partnerships unless restricted by their trust deeds.
Documents Required
- Partnership Deed
- Address Proof (both company & Partners) & Identity Proof of Partners
- Passport-size Photographs
- Registration Certificate (if applicable)
- Partnership Firm’s PAN Card & Bank Account Proof
- Specimen Signature
- GST Registration (if applicable)
- Power of Attorney, NOC from the Property Owner, & Affidavit
Partnership Firms
Partnership company registration in India is an arrangement where two or more people agree to conduct business operations together, sharing profits and liabilities among members. This setup is popular among small businesses and entrepreneurs due to its simplicity and mutual benefit structure.
A partnership firm is established by two or more partners with the goal of achieving profit. The legal document used to formalize this arrangement is known as a partnership deed. The primary law governing partnership registration in India is the Indian Partnership Registration Act of 1932. According to this Act, a partnership is a union of individuals who have agreed to share the profits of a business, with each partner acting on behalf of the others. For a partnership firm, the maximum number of members is 10 for banking businesses and 20 for other types of enterprises.
While partners in a partnership firm are separate legal entities, the firm itself is not considered a separate legal entity. This means that a partnership firm cannot own property or be a debtor or creditor; the assets, liabilities, and credit of the firm belong to the partners. It is crucial for the partnership agreement to clearly outline how profits and losses will be distributed to avoid future misunderstandings. Each partner has the authority to conduct business on behalf of the others.
Registering a partnership firm is cost-effective, simple to set up, and has fewer compliance requirements, making it suitable for certain types of businesses, such as home-based enterprises that are unlikely to incur debt. General partnerships have an optional registration process. To draft a current and compliant partnership deed, you can consult our experts. It’s important to note that if the number of partners falls below two due to death, incapacitation, or resignation, the partnership firm will be dissolved.
Advantages
Partnership firm registration provides a solid foundation for collaborative ventures and below is an outline of the key advantages it offers for your business growth and legal framework:
Simple to Begin
A partnership is one of the simplest types of businesses to launch. Typically, the only requirement for registering a partnership firm in India is a partnership deed registration. This means you can establish a partnership quickly, often within a single day. In contrast, registering an LLP takes between 5 to 10 working days, as it involves contacting the Ministry of Corporate Affairs (MCA) for electronic signatures, Director Identification Numbers (DIN), name approval, and incorporation.
Minimum Compliance
When dealing with a private limited company, compliance work often becomes a significant burden unless you hire someone to manage it for you. This hassle is greatly reduced when you form a partnership. Starting a business burdened with compliance work is not ideal; with a partnership, you can focus on growing your company without being weighed down by excessive regulatory requirements.
Comparatively Economical
Setting up a private limited company requires an initial expense of at least ₹15,000, not to mention ongoing compliance and auditor fees. For a new business, these costs can be burdensome. On the other hand, registering a partnership firm costs only about ₹2,000. This affordability makes partnerships an attractive option for startups and small businesses looking to minimize initial expenses while still enjoying the benefits of a formal business structure.
Key Characteristics of Partnership Firms in India
Eligibility for Partnership Firm Registration in India
Anyone with the legal capacity to enter into a contract may enter into a partnership agreement. Every individual who meets the legal requirements for majority, is of sound mind, and is not prohibited from contracting by any laws to which they are subject, may form a partnership. The following individuals and entities are eligible to enter into a partnership:
- Individual: A person with the legal capacity to enter into a contract can join the partnership firm as a partner. An individual can be a partner in a company with more than two partners both as themselves and as a representative known as Karta of the Hindu Undivided Family (HUF).
- Firm: While a partnership firm itself cannot form a partnership with another firm or person, a partner in a partnership firm can form a partnership with another individual. The profits of the new partnership can then be shared with the partner’s original partnership firm.
- Hindu Undivided Family (HUF): A Karta of an HUF can join a partnership in their individual capacity, provided they contribute their own effort and ability to the partnership.
- Company: A company, being a juristic person, can join a partnership firm as a partner if its objectives permit it to do so. This allows the company to collaborate and share profits within the framework of the partnership.
- Trustees: Trustees of private religious trusts, family trusts, Hindu mutts, and other religious endowments can form partnerships unless their constitution or objectives explicitly forbid it. Trustees act as legal persons and can enter into contracts and partnerships on behalf of the trusts they manage.
Steps for Partnership Firm Registration Online
Registering a partnership firm involves a straightforward process to ensure legal recognition. Below are the steps to help you get started:
Submit a Register Partnership Firm Application
To begin the registration process, an application form along with the required fees must be submitted to the Registrar of Firms in the state where the company is located. The registration application must be signed and verified by all partners or their authorized representatives.
Choosing the Name of the Partnership Firm
Choose a unique name for the partnership firm. The name should comply with the regulations, ensuring it is distinct and not similar to any existing registered firm names. Additionally, avoid using names that imply government affiliation or are otherwise restricted.
Registration Certificate
Upon satisfactory review of the registration application and supporting documents, the Registrar will register the firm in the Register of Firms and issue a Registration Certificate. This certificate serves as proof of the firm's registration. The Register of Firms is publicly accessible, and anyone can obtain information about registered firms for a fee.
What is a Partnership Deed?
A Partnership Deed is a legal document that outlines the terms and conditions under which a partnership operates. It includes details such as the partners’ roles, responsibilities, rights, profit-sharing ratios, initial contributions by each partner, and the duration of the partnership.
Importance of a Partnership Deed:
- Defining Duties and Responsibilities: The Partnership Deed explicitly defines the duties, privileges, and liabilities of each partner. This clarity helps prevent misunderstandings and disputes among partners.
- Legal Recognition: The Partnership Deed serves as evidence of the partnership’s existence and outlines its operational framework, which can be crucial in settling legal matters or disputes.
- Resolution of Disputes: In case of disagreements among partners, the Partnership Deed provides a clear reference point. It simplifies the resolution process by outlining procedures for decision-making and conflict resolution.
- Financial Arrangements: The Deed specifies how profits and losses will be distributed among partners. It also details the procedures for compensation and repayment of investments or loans made by partners.
- Roles and Contributions: Each partner’s role within the partnership is clearly defined in the Deed, including their specific responsibilities and contributions to the partnership’s operations and decision-making processes.
Types of Partners in a Partnership Firm:
- Active Partner: An active partner actively participates in the day-to-day operations and management of the partnership. They represent the partnership in business decisions and activities.
- Nominal Partner: Nominal partners are named in the partnership agreement but do not contribute to the business financially or participate in its management. They have no ownership stake or entitlement to profits.
- Dormant Partner: Dormant partners do not actively engage in managing the partnership. However, they share in the profits and losses of the firm and are liable to third parties.
- Sub-Partner: A sub-partner shares the profits of the partnership with an outsider but has no rights against the partnership and is not liable for its debts.
- Partner in Profits Only: These partners share in the profits of the partnership but are not liable for its losses. They are responsible only for acts committed for their personal benefit.
- Outgoing Partner: An outgoing partner leaves the partnership while the remaining partners continue the business. Public notice of the partner’s retirement is mandatory, and until then, they remain liable to third parties.
- Incoming Partner: An incoming partner joins an existing partnership with the consent of all existing partners. They are not liable for actions taken by the partnership before their entry.
- Partner by Holding Out (Section 28): Partners by holding out are individuals who, through their words or actions, lead others to believe they are partners in the firm. Despite not being actual partners, they may be held liable to creditors or investors who believed they were partners based on their conduct.
Duties of Partners in Partnership Registration
- Partnership Agreement: Partners must adhere to the partnership agreement, which outlines responsibilities, profit distribution, and dispute resolution.
- Financial Contributions: Partners contribute capital, assets, or property as outlined in the agreement.
- Management and Decision-Making: Partners share in managing operations and decision-making processes.
- Due Diligence and Care: Partners must act diligently, avoid conflicts of interest, and seek advice when needed.
- Financial Reporting: Partners maintain accurate financial records and provide reports to ensure transparency.
- Non-Compete and Non-Disclosure: Partners protect confidential information and refrain from competing with the partnership.
- Acting in Partnership’s Interest: Partners prioritize the partnership’s well-being over personal interests.
- Contributing Effort and Expertise: Partners contribute skills and knowledge to enhance partnership success.
- Good Faith and Fair Dealing: Partners engage in respectful and transparent communication, resolving conflicts amicably.
- Legal Compliance: Partners ensure the partnership complies with laws, regulations, and licenses.
- Fiduciary Duty: Partners act honestly, in good faith, and with loyalty to the partnership and fellow partners.
Online Partnership Deed Registration Fees
Government fees for registering a partnership firm in India vary by state, depending on the partners’ contributions. However, our TaxAdvisr Partnership Firm Registration Online Plan offers an affordable option.
Start your partnership firm registration online for just ₹1499 + govt. taxes.
The plan includes:
- PAN application and Drafting of partnership agreements
- Filing of documents with the Registrar of Companies (RoC), including the partnership deed
- 100% online issuance of registration certificate
- Expert consultation
Tax Compliances After Obtaining Partnership Firm Registration Online
After completing the partnership firm registration process, several tax compliances must be adhered to by the partners. The first step involves obtaining PAN (Permanent Account Number) and TANs (Tax Deduction Account Numbers) from the Income Tax department. These identifiers are essential for tax reporting and deduction purposes.
Regardless of the partnership firm’s profitability, filing an Income Tax Return (ITR) annually is mandatory under Indian tax laws. The firm’s total income is subject to a tax rate of 30%, plus applicable surcharges.
Partnership firms with annual revenues exceeding ₹100 lakhs are required to undergo a tax audit each year. Additionally, firms earning more than ₹40 lakhs annually (₹20 lakhs in the North-Eastern states) must register for GST online. This requirement extends to businesses engaged in e-commerce, marketplace aggregation, and export-import activities, ensuring compliance with GST regulations.
Once registered for GST, partnership firms must submit monthly, quarterly, and annual GST returns. They are also obligated to file quarterly TDS (Tax Deducted at Source) returns, withholding tax as per the prescribed TDS rules and utilizing their TANs.
Furthermore, every partnership firm must obtain an ESIC (Employees’ State Insurance Corporation) registration and submit ESIC returns to comply with social security regulations.
Partnership Firm Registration FAQs
Partnership firms are governed by the provisions of the Partnership Act, 1932. Registration of these firms is handled by the Registrar of Firms in each respective state.
Yes, audit is mandatory for all partnership firms in India. According to the Income Tax Act, firms with a turnover exceeding ₹1 crore in case of business or ₹50 lakhs in case of a profession during a financial year must get their accounts audited.
Yes, a partnership firm can be converted into a company in India under Section 366 of the Companies Act, 2013. Specific procedures and requirements need to be followed for this conversion.
The timeline can vary. It’s advisable to consult with our experts for specific legal advice tailored to your needs.
Converting a partnership into a private company involves several steps:
Obtain No Objection Certificate (NOC) from secured creditors, if any.
Apply for Director Identification Numbers (DIN) for all partners.
Apply for Digital Signature Certificates (DSC) for all partners.
File Form URC-1 with the Registrar of Companies.
Submit all necessary documents (like Partnership Deed, Statement of Accounts, etc.).
Upon approval, the Registrar of Companies will issue a Certificate of Incorporation, completing the conversion.
Yes, a partnership firm registered in Delhi can operate in other states. However, additional licenses or registrations may be required if establishing branch offices or conducting extensive business activities in other states.
To register a partnership firm in Rajasthan:
The firm must have at least two partners.
Partners must be competent to contract.
Partners must agree to share profits and losses.
The firm’s business activities must be lawful.
In a partnership firm, partners are jointly liable for losses or damages caused to third parties during the course of business. They are collectively responsible for penalties incurred, irrespective of which partner caused the issue.
There is no specific minimum capital requirement to start a partnership firm. The partners can contribute any amount they deem necessary to initiate and operate the business.
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What I loved most about TaxAdvisr was their patience. They listened to our needs, explained every step in simple language, and ensured we were comfortable throughout the process.
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Meera Nair - Co-founder, Nova CreationsI’m so glad we chose TaxAdvisr for my partnership firm registration. Their team was always available to answer our questions and made sure everything was done on time. Truly exceptional service!
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