Overview

A partnership firm is a well-recognized business structure created by mutual consent of all partners for a profitable purpose. The firm is managed, owned and controlled by a group of people who are known as partners and have some shared capital in the firm.

Partnership firms are distinguished as registered and non-registered firms. It is not mandatory to register for partnership firm registration and it is advised to do so. Partnership firm registration offers various benefits that do not apply to non-registered people.

A partnership firm registration is done under the Partnership Act, 1932 with very little documentation and formalities.

Registration

An association of two or more people, who have decided to engage in business activities, is considered a partnership firm. The purpose of such organization is to earn profit. Members of such partnership firm are called partners. All partners share profits and losses in proportion to their respective ownership.

In a partnership firm, the amount contributed is often very large because each partner can contribute the required total capital. The decision making process in a partnership firm is a collective business. Every partner should be on the same path before taking any decision. Two partners cannot start their own business venture without partnership firm registration. 

Required Documents

• Partnership Deed

  A partnership deed is a type of agreement formed within partners that defines their rules, duties, practices, functions and shares. This helps avoid future conflicts and disputes between partners. It is made and signed by all the members on judicial stamp paper, costing approximately Rs. 2000 /-

• PAN Card

  All designated partners of the firm are required to submit their PAN card as proof of their identity.

• Address Proof

  All the participants have to submit a copy of their address proof which can be either their Aadhar card, Voter ID, ration card, driving license etc. The address and details given in the document should match the PAN card details.

• Office Address Proof

  The address proof of the concerned work site has to be produced. In the case of rented property, an applicant has to submit a rent agreement with utility bill like electricity, water, gas bill, property tax bill etc. in addition to the NOC or NOC. landlord. If the place is owned by any partner or partners, the applicant must submit a utility bill with the NOC.

Advantage and Disadvantage of Partnership Firm

• Easy Business Structure

  A partnership firm is one of the easiest business structures that can be started by preparing a partnership deed, which requires partnership firm registration. So it can be started when the partners are ready and with minimal documentation, while other firms require at least 10-15 days to complete all the formalities like 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 may transact on behalf of the firm without the consent of other named partners.

• Raising Funds

  Inability in other firms such as proprietorship firm, funds can be easily raised in partnership firm. Many partners are able to make more possible contributions; Banks also consider partnership firms more favorable for approving credit and loans.

• Easy Management

  All partners are assigned tasks and responsibilities to the best of their ability, as outlined in the partnership deed. Partnership deed helps in avoiding any conflict between partners.

Disadvantage of the Partnership Firm

• Unlimited Liabilities

  The liabilities of the partners are not limited in a partnership firm which acts as the biggest drawback for the partners. In case of a loan or any other misfortune, their personal property can be used to clear the loan.

• A Maximum Number of Members

  The maximum number of partners in a partnership firm is limited to 20.

• Less Trustworthy for the General Public

  Creating a partnership firm is easy and a partnership firm can operate without registration. It can also run without any strict rules and laws. These factors make it less reliable in the eyes of the general public.

• Abrupt Dissolution

  A partnership firm registration can be easily dissolved in the event of death or bankruptcy of any partner. Such situations hinder the growth of a business.

Registration Procedure

• Name of the Firm

  Select a name for your firm that is unique and should not contain words such as emperor, empire, crown, empress or any other words that show government approval or approval.

• File an Application

  First, the applicant must file an application in Form 1 of the partnership firm registration. An application is filed with the firm's registrar of the respective state where the firm is located. The application is filled in the prescribed format with specific fee amount.

• Preparation of Partnership Deed

  Partnership deed is prepared with the consent of all the partners on the stamp paper. Basic 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 involved

  3. Capital contribution made by all partners

  4. Shares/Interest of all the partners

  5. Profit/loss sharing ratio among all the partners

  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, the documents are closely verified by the authorities. If everything falls under the provisions of the Act, the registration certificate is issued to your firm.

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