Partnership Firm Registration
Partnership firm is best for small businesses and who plans to work on a small scale. It is governed by the Partnership Act, 1932.”Partnership” is the relation between the persons who have agreed to share the profits of a business carried by them and suffer the losses, if any. Persons who have entered into partnership with one another is called partners.
Advantages of Partnership Firm Formation:
- Easy Formation: Partnership Firm is to incorporate. We can start an unregistered Partnership Firm in just 2 To 4 days.
- Less Compliance: Compliance is lesser as compare to private limited company or limited liability partnership. Partnership firm need not to appoint an Auditor
- Sharing of Risk: As per the provisions of Partnership Act,1932 partners are sharing risk and burden of losses does not come on one individual.
Registration of Partnership Firm:
Registration of Partnership Firm is optional. There are certain benefits of getting the Partnership Firm registered. Consequences of non registration of firm are as under-
- Firm cannot file suit against others.
- Firm cannot file suit against partners.
- A partner of an unregistered firm cannot file a suit against the firm or other persons.
Partnership Deed is an agreement between partners of Partnership firm.
This agreement should be in written form and contains all the Terms & Conditions.
Illustratively there are some key points that should be contained in partnership deed.
- The name of partnership firm.
- Nature of Business.
- Date of Commencement of Business.
- Place, Duration & Profit Sharing Ratio of firm.
- Contribution to the capital of all the partners.
- Other Terms & Conditions as decided among partners.
Procedure of Registration of Partnership Firm:
- Application to Registrar of Firms in the prescribed form(FORM -A), Now a days Online application Could be filed
- Attach duly signed copy of partnership Deed with the application.
- Pay Necessary Fees and Stamp Duty.
- If all the formalities are complete then it would be register in the record of the registrar and Certificate of Incorporation is issued by the registrar.
Documents Required for Formation of Partnership Firm
- Pan Card of proposed Partners (Self Attested Copy).
- Partners Address Proof (Self Attested Copy of Aadhar Card and Voter ID/ Passport/Driving License).
- Business Address Proof If Owned (Electricity Bill / Water Bill/ Telephone Bill), If Rented (Rent Agreement Copy With NOC From Owner).
Documents for Registration of partnership firm
- Partnership Deed
- Address Proofs
- Affidavit for certifying the details mention in the deed and documents.
Ease of Accommodating Investment
Limited Liability Protection
Frequently Asked Questions
Q1. Is partnership firm registration necessary?
No, registration of partnership firm is not mandatory, but there are certain consequences of not registering a partnership like partners are not able to suit on partnership firm and even partnership firm is not able to file suits against third parties.
Q2.How many partners can there be?
A partnership firm in the banking business can have up to 10 partners, and others can have 20 partners. And the profit will divide equally.
Q3.Is it possible that office address can be a residential premises?
Yes, Partners can use their residential property to register a partnership firm; it’s required only the proof of registration like electricity bill copy or rent agreement or no objection certificate.
Q4.What is the capital required to start a partnership firm?
Nothing, no minimum capital is required to start a partnership firm, Partners only have to maintain a particular balance in current account as per the bank norms
Q5.What is the requirements to become a partner in a partnership firm?
Only Indian resident person can be a partner in a partnership firm, if firm wants to introduce any foreign national then they should incorporate a private limited firm.
Q6.Can we convert our partnership firm into private limited company?
Yes, we can convert that but only if name is available on ministry of corporate affairs otherwise float a new private limited company with a new name.
Q7. Partnership Deed registration is compulsory or optional?
Partnership Deed Registration is optional as per the requirements of the partnership firms.