Overview of Partnership Firm Registration
A partnership firm is a
well-recognized business structure formed with mutual consent of all the
partners for a profitable purpose. The firm is managed, owned and controlled by
a set of people that are known as partners and have some shared capital in the
Partnership firms are distinguished
as registered and non-registered firms. Partnership firm registration is not
mandatory to register but it is advisable to do so. Partnership firm
registration offers various benefits that do not apply to the non-registered
A partnership firm registration is
done under the Partnership Act, 1932 with very less documentation and
Partnership Firm Registration
An association of two or more
people who have decided to indulge in business activities is regarded as a
partnership firm. The motive of such organization is to earn profit. Members of
such a partnership firm are called partners. All the partners share the profits
and losses in proportion of their respective ownership.
In a partnership firm, the amount
of money contributed is often huge because each partner can contribute to the
total amount of capital required. The decision-making process in a partnership
firm is a collective business. Every partner should be on the same path before
taking any decision. Without partnership firm registration two partners cannot
start their business venture.
Partnership deed is a kind of
agreement formed within the partners which defines their rules, duties,
methodology, functions and shares. It helps to avoid future conflicts and
disputes between the partners. It is created and signed by all the members on the
Judicial Stamp Paper that costs around Rs. 2000/-
All the designated partners of the
firm are required to submit their PAN cards as a proof of their identity.
All the partners have to submit a
copy of their address proof which can either be their aadhar card, voter id,
ration card, driving license, etc. The address and details given in the
document should match PAN card details.
Office Address Proof
Address proof of the respective
working place has to be submitted. In case of rented property, an applicant has
to submit a rent agreement along with a utility bill such as electricity,
water, gas bill, property tax bill, etc. Apart from it he/she has to submit the
No Objection Certificate or NOC from the landlord. If the place is owned by any
partner or partners then the applicant has to submit a utility bill along with
Pros and Cons of Partnership Firm Registration
Pros Of The Partnership Firm Registration In India
Easiest Business Structure
Partnership firms are one of the
easiest business structures that can be started by formulating a partnership
deed for which partnership firm registration is necessary. Hence it can be
started when the partners are ready and with minimum documentation whereas
other firms require at least 10-15 days to cover up all the formalities like
obtaining DSC, DPIN name approval, etc.
Ease In Decision Making
It’s easier and faster to make a
decision in a partnership firm registration as you don’t have to follow
regulations to pass a resolution. A partner can perform transactions on behalf
of the firm without any consent of other designated partners.
Incompetence to other firms such as
proprietorship firm, funds can be easily raised in a partnership firm. Multiple
partners are capable of making more feasible contribution; also banks consider
a partnership firm more favorable for sanctioning credits and loans.
Easy Management Without Any
All the partners are assigned works
and responsibilities as per their capability, as mentioned in the partnership
deed. Partnership deed helps in avoiding any type of conflicts between the
Cons Of The Partnership Firm
The liabilities of partners are not
limited in the partnership firm that acts as the biggest drawback for the
partners. In case of debt or any other misfortune, their personal assets can be
used to clear the debts.
A Maximum Number Of Members
The maximum number of partners in a
partnership firm is limited to 20.
Less Trustworthy For The General
A partnership firm is easy to form and can work
without partnership firm registration. It can also operate without any strict
rules and regulations. These factors make it less trustworthy in the eyes of
the general public.
A partnership firm registration can easily be
dissolved in case of death or insolvency of any partner. Such conditions hamper
the growth of a business.
File An Application
First of all, the applicant has to file an
application in Form 1 of partnership firm registration. An application is filed
with Registrar of Firm of the respective state where the firm is located. The
application is filled in prescribed format along with specific fees amount.
Preparation Of Partnership Deed
Partnership deed is prepared with
the consent of all the partners on the stamp paper. Below Given Components
Are The Parts Of Partnership Deed:
1. Details of the partners and firm such as their
name, address, qualification, etc.
2. Nature of the firm or business activities
3. Capital contribution made by all partners
4. Shares/Interest of all the partners
5. Profit/loss sharing ratio among all the
6. Rights, duties, salaries, commissions, or
payable amount of the partners
7. Details of loans provided by the partners
8. Circumstances or process that would be
followed in case of death or retirement of any designated partner
9. Other clauses made with mutual consent of
all the partners
Submission Of The Documents
Submit all the prerequisite documents along
with the partnership deed you have prepared.
Verification Of Documents And
Issuance Of Registration Certificate
After submission, documents are closely
verified by the authorities. If everything falls under the provisions of act,
registration certificate is issued to your firm.
Edwin Corporate Law Firm provides Partnership
Firm Registration service, to avail the service contact our expert