A partnership firm is very popular among Small and Medium Businesses in India. It’s easy to set up, manage and operate. If you haven’t read about Partnership firm, we request you to read it before reading this one. We have explained every aspect of Partnership firm in that blog.
If you have already been through that blog, keep reading. In this piece, I will try to explain the Partnership registration process in brief.
Let’s begin
Is Partnership firm registration mandatory in India?
No. Partnership firms are governed by the Partnership Act, 1932. This act states that Partnership firms are not mandated to register their Business with the Government. So if you do not want to get your Firm registered, that’s alright.
But as a Business Consulting Agency, we would recommend you to register your Partnership firm. The reason is, if you do not get your Firm registered, you won’t be eligible to avail any Government benefits.
How to apply for the Partnership Firm Registration?
You can register your Partnership firm by filling Form no.1 and submitting it to the Registrar of Firms of the area from where you will be operating your Business. It should be noted that the application must be sent to the Registrar within one year of incorporation of the Partnership firm. Also, you will have to attach a true copy of the Partnership Deed, the fees for the application and other necessary documents along with your application form.
The application should bear the signature of all the Partners. The signatures of agent/agents, who are authorized by the Partners to take necessary decisions for the Firm, are also valid.
What details have to mentioned in the Application form?
The application form for the Partnership Firm registration must contain the following information:
- Name of the Firm
- Nature of the Business that will be undertaken by the proposed Firm
- Date of incorporation of the Business
- Address of Principal Place from where the Business will be concluded
- Address of the Subsidiary Places of Business
- Complete detail of the Partners, including their full name, residential address and relevant proof.
- Duration of the Firm.
Are documents necessary for the Partnership registration?
Following are the legal documents that are necessary for Partnership Registration.
- Application Form no. 1
- A true copy of the Partnership Deed
- Rental agreement or Lease agreement if the property is rented or leased
- Proof of Ownership of the premises if it is owned
What is a Partnership deed, and what details it must have?
A partnership deed is a legal document, prepared on the Government approved Stamp Paper, that defines the responsibilities and rights of every Partner. This Partnership is enforceable by law in nature. It acts as a guiding light for the Partners to run and manage the Partnership firm and its daily operations. It also eliminates the possibility of any mutual disagreement and discrepancies amongst the partners.
Critical components of a Partnership Deed
- Name of the Partnership Firm
- Address of the Principal Place of the Business
- Capital investment made by every Partner and total investment
- The Profit and Loss sharing ratio and Process.
- Mode of Profit distribution amongst the Partners.
- It should also mention the Responsibilities, Powers and Rights of every Partner. If a Managing director has to be appointed for the business’s day-to-day management, then his/her name must be mentioned in the Deed.
- The mode accounting that will be followed by the Firm has to be mentioned in the Deed.
- A partnership deed should contain the information about the Process that has to be followed in case of the death/ incapacitation to discharge one or more partners’ duty or withdrawal.
- It should also contain information about how a partner/partners’ rights will be distributed in case of expulsion due to any reason.
- Finally, the Partnership deed must have information about the mode of arbitration in case of any dispute.
Naming Process of the Partnership firm
The naming of any Partnership firm is to be done as per section 58(3) of the Indian Partnership Act, 1932. If the Partners are not satisfied with the order related to the naming of their Partnership firm, they are entitled to file an appeal within the order’s 30 days of communication.
Is there any fee for registering a Partnership firm?
No, there are no fees. As per the Indian Partnership Act 1932, the applicant has to pay Zero charges to apply Registration.
Entry of Statement
Once the Registrar goes through the application and finds no discrepancies, he/she makes the entry of Statement in the register and files the Statement.
The date on which entry is made in the registers is known as the Partnership firm’s Registration Date.
PAN of a Partnership firm
The Registration of the Partnership firm with the Registrar is different than the Registration of the PAN. So even if you are not getting your Partnership firm registered with the Registrar of Company, getting a PAN for your Firm is mandatory.
Final thoughts
The partnership registration process in India is pretty simple and straightforward as compared to Company registration. The compliances and paperwork are minimal. So anyone can register a Partnership Firm in India quite easily.
Still, we would recommend consulting an expert before moving forward with the Process. The reason is, experts like Probal Consulting Group deal with such registration process daily. They know the whole Process thoroughly. So the chances of errors while filing an application drops down to zero. This will also help in saving crucial time so that you can focus on your Business.
Finally, I hope you have got a clear understanding of the Partnership Registration Process in detail.
Still, if you have any queries, feel free to reach us. We will be happy to help!
Probal Consulting Group is a leading Taxation, Accounting, and Compliance firm that helps individuals, MSMEs, and other businesses manage their accounting, taxation regulatory compliance affordably.
