What is Partnership Registration?
Partnership is a popular form of business structure where two or more people come together and manage the business according to the terms and objectives mentioned in the Partnership Deed. It is a straightforward process to register a partnership and is commonly adopted by small and medium-sized businesses in the unorganized sector.
Setting up a Partnership Firm is simple and does not require any registration. The partnership agreement is the only document required to initiate a partnership. All the partners of the firm are responsible for resolving any legal issues or debts. Partnership firms can be categorized into two types – Registered and Unregistered. A maximum of 20 partners are allowed to be part of a partnership firm.
Why go for a Partnership Firm?
1. Minimum 2 Persons are Required to Set up a Partnership
2. Low cost in Setting Up a Partnership Firm
3. Less compliance Requirements as compared to any other Form of Business
4. Shared Responsibilities and Duties Between Partners
ERA Legal Services Partnership Package
The Services which are included in our package are as Follows:
✅ Drafting of Partnership Deed
✅ Pan of Partnership
✅ Tan of Partnership
✅GST Registration
✅CA Certificate
Documents required for Partnership Firm Registration
1. Name & Nature of Firm
2. Pan Card, Adhar Card & Photo of Partners
3.Objectives of Firm
4.Electricity Bill & Rent agreement of Firm
Features of Partnership Firm:
1. Minimum 2 Person: Minimum 2 Person are Required to Form a Partnership Business. However, maximum 20 partners are allowed in a firm (10 in banking business).
2. No Minimum Capital Requirement: There is no Minimum Capital Requirement in Partnership Business.
3. NO Foreign Direct Investment: No FDI is allowed in case of Partnership Business. only Indian citizen can become the partner and start the partnership firm.
4. Unique Name: Name of the firm should be unique, and it must not same or similar to the name of any existing trademark which is registered or applied.
Process of Partnership Registration:
1. Documents: The First Step is collecting Documents of all the partners and the place of business where from where the firm shall be operating its business in India.
2. Selection of Name: The name of the partnership firm should be cross-checked with the trademark registry to avoid any infringement of someone else Trademark or any brand name.
3. Drafting of Partnership Deed – The Partnership Agreement or the Deed is the main charter document of the firm and is also considered as the constitution of the firm which determines the mutual rights of the partners among themselves
4. Stamp Duty of Partnership Deed: After the draft partnership agreement is approved and adopted by the parties the stamp duty on the partnership deed has to be paid which varies from state to state and on the capital of the partnership agreement.
5. Signing of Partnership Deed: The partnership deed is signed by the partners in the presence of two witnesses and thereafter the deed should be notarised by presenting the same before a notary public.
6. Pan and Tan Allotment: The partnership firm needs to make an application in the prescribed form before the income tax department for the allotment of PAN and Tan
Difference between LLP & Partnership
Authority: LLPs are registered in India under the Ministry of Corporate Affairs, Central Government. Partnership firms are registered with the Registrar of Firms, controlled by the respective State Government in which the firm is registered.
Limited Liability Protection: One of the significant benefits of a Limited Liability Partnership (LLP) compared to a traditional partnership firm is that each partner is not accountable for the negligence or misconduct of another partner. LLP also offers limited liability protection to its owners from the debts of the business. However, unlike shareholders of a private limited company, partners in an LLP can directly manage the business..
Number of Partners: Both LLPs and Partnership Firms require a minimum of two partners to be registered. Once registered, an LLP can have unlimited partners, while a Partnership Firm must maintain at least two partners at all times. If the number of partners in a Partnership Firm falls below two due to the death, incapacitation or resignation of a partner, the partnership firm would be dissolved. However, in an LLP, the sole remaining partner can find a new partner to fill the position without dissolving the LLP.
FAQ on Partnership Firm Registration:
Q. What are the pre-requisites for Starting a Partnership Firm in India?
A. In a partnership firm, there must be a minimum of two partners, and the maximum number of partners cannot exceed 20. The partners come together to conduct a legal business with the objective of earning profits.
Q. Do I have to file an annual return to the registrar of firms?
A. Annual return filing is not mandatory for a partnership firm, unlike Limited Companies or LLPs. However, the firm is required to file its Income Tax Return before the due date at the end of the financial year. The Partnership Act does not mandate an audit of the firm’s books, but if the firm’s turnover exceeds 2 Crore, a tax audit becomes necessary.
Q. Is it necessary to register a partnership?
A. No, it is not Mandatory to Register a Partnership Business, but it is advised to get it done for legal Purpose.
Q. How much time does it take to register a partnership?
A. The registration of Partnership Firm in India can take up to 12 to 14 working days. However, the time taken to issue a certificate of incorporation may vary as per the regulations of the concerned state. The registration of Partnership Firm is subject to Government processing time which varies for each State.
Q. Are there any grounds on which my partnership can be invalid?
A. Often, if the partnership agreement is not registered, the court may deem a partnership invalid. If the object of the business is illegal, the court may consider the partnership invalid and dissolve the partnership.
Q. If all partners wish to end the partnership, how can they do so?
A. If the partners of a firm wish to end the partnership, they can do so by dissolving the partnership by notice, if it is a partnership of will. A partnership can be dissolved in accordance with the terms laid out in the Partnership Deed, or they can do so creating a separate agreement.
Q. Can my certificate of registration be cancelled?
A. A partnership firm’s certification of incorporation can be revoked in case of dissolution. Dissolution can occur automatically when all partners or all partners except one partner are declared insolvent, or if the firm is involved in illegal activities such as trading in drugs, corporate malpractice, or engaging in business with countries that may harm India’s interests.
Q. What is the scope of liability when it comes to partnerships?
A. Each partner in a partnership firm is collectively and individually responsible for all actions and decisions made during the firm’s operations while they are a partner. This implies that if the business causes any harm or loss to a third party or violates any laws, all partners will be held accountable, even if the wrongdoing was committed by only one partner.