Partnership Firm Registration
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What documents are required to register a Partnership Firm In India?
The application for the Partnership registration form must include the prescribed documents like the Identity proof, address proof, a real copy of the Partnership deed entered into and the proof of the Principal place of business.
Any of the following documents can be submitted as identity proof and address proofs.
- PAN card
- Passport
- Driver License
- Aadhar Card
- Voters ID
Proof of Business premise can be established by submitting the following documents:
- Sale Deed in case if the Partner owns the place
- Rental agreement copy if the office is on rental basis
- Copy of the latest electricity bill or the tax bill receipt
How to register Partnership Firms in India?
IndiaFilings can help you register a partnership firm in less than seven days.
Types of Partnership firm
Depending on the extent of the liability while Partnership firm registration, we can derive the different classes of partners.
Partnership Firms can be classified into two types registered and unregistered Partnership firms. The Indian Partnership Act states that the only criterion to commence the business as a Partnership firm is a finalization and the partnership deed's execution between the Partners.
Under this act, the Partnership firms don't need to be registered. As an outcome of this lot of partnership businesses exist as unregistered partnership firms.
There are no penalties for the nonregistration of the partnership firms. Also, a partnership firm can be registered even after formation. But the unregistered partnership firms have been denied certain rights in Section 69 of the Partnership Act, which deals majorly with the effects of the non-registration of the partnership firm.
Here are the reasons why an individual should opt for a registered partnership firm:
A registered firm partner cannot file suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.
No suit to enforce a right arising from an agreement can be instituted in any court by or on behalf of a firm against any third party unless the firm is registered under the Partnership Act.
An unregistered firm or any of its partners cannot claim set-off or other proceedings in a dispute with a third party.
Therefore, it is better to register a Partnership sooner or later.
What are the advantages of Partnership firm Registration?
Partnership firm registration has more advantages than disadvantages. Here, we have mentioned the advantages of Registering a Partnership firm.
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Easy to start
Partnership firms are more comfortable to set up, and the only requirement in most cases is a Partnership deed.
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Decision making
In a Partnership firm, decision-making is faster as there is no concept such as passing the resolution.
The Partners of Partnership firms in India enjoy a range of powers as they can undertake any business on behalf of the Partner's consent.
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Raising of Funds
A Partnership firm can quickly raise funds as compared to a Proprietorship firm.
Even the banks find Partnerships more favorable while sanctioning credit facilities in comparison to a Proprietorship firm.
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Sense of Ownership
As every Partner is the owner, the partners have the liberty to manage and control the firm's activities. The tasks might be varied, but people in a Partnership firm are together for a common cause.
Ownership creates a higher sense of accountability and belongingness, which helps in creating a diligent workforce.
What is the difference between Partnership and LLP?
| Basis | Partnership | LLP |
|---|---|---|
| Cost | A partnership firm is registered through IndiaFilings starting from Rs.5899 | LLP can be registered online starting at just Rs.7899 through IndiaFilings |
| Authority | A partnership firm is registered under Section 58 of the Indian Partnership Act. | LLPs in India are registered under the Ministry of Corporate Affairs, Central Government. |
| Limited Liability Protection | In a Partnership, the partners jointly venture to share the profits and losses. | In an LLP, the Partner is not responsible for any negligence or misconduct of another partner. LLPs also provides liability protection to the owners from the debts of the LLPs. |
| Number of Partners | Partnerships must have two minimum of two partners to be registered. If the number of partners reduces below mandatory two due to death or incapacitation, the firm will stand dissolved. | Similar is the case with the LLPs. At least two members are required to get registered. If the number of Partners reduces below 2, the Partner would still find a new partner without dissolving the LLP. |
How to convert a Partnership firm into an LLP?
Registering Partnership firms do have certain drawbacks as compared to the newly introduced Limited Liability Partnerships. As the Partnership firms do not provide Limited Liability Protection for the Partners.
In the recent past, LLPs have become a prime choice for small and medium-sized business firms.
Let us take a look at the process of converting a Partnership firm into an LLP.
To commence the Partnership conversion into an LLP, Digital Signature Certificate and DPIN OR Director Identification Number (DIN) must first be obtained for all the Partners.
Following documents are required along with Form 17 :
- Consent of Partners for conversion into an LLP
- Incorporation Documents for LLP
- NOC from Tax Authorities
- Financial Statements of the Partnership firm
- List of all creditors along with their consent
- Any other document or information as requested by the authorities.
Once the mentioned documents are submitted to the Registrar after the verification, a certificate of Registration for LLP is issued.
The LLP must then inform the concerned Registrar of firms about converting a Partnership into an LLP within 15 days from the date of conversion through the prescribed forms.
What is the procedure to transfer the license and Registration?
The Licenses, approvals, permits, or registrations will not be directly transferred into an LLP. Also, suppose there are any properties registered under the Partnership firm before the conversion. In that case, the LLP must approach the concerned authorities and initiate the laid down procedure for the transfer of assets.
Hence, before converting a Partnership firm into an LLP, the Partner must clarify all the aspects.
After the conversion into an LLP, the Partnership stands dissolved, and the name of the Partnership firm is removed from the register of the Registrar of Firms. The Partnership firm is considered wholly transferred into an LLP, and the conversion does not affect any existing contracts, employments, agreement, etc.
The Partners will now enjoy Limited Liability Protection for all transactions conducted after the conversion of Partnership into an LLP. The Partners will continue to be personally liable for all the business operated as a Partnership before conversion.
Post conversion into an LLP, the newly formed LLP must include a statement that it was converted from a Partnership into an LLP in all official correspondence for not less than 12 months from the date of conversion.
To convert a Partnership firm into an LLP, visit the IndiaFilings website.
Indiafilings has helped over thousand of entrepreneurs to choose the correct type of business entity. Our services have helped entrepreneurs grow their businesses at an affordable cost.
We aim to help the entrepreneur with the legal and regulatory requirements and guide the individual throughout the business life cycle, offering support and guidance at every stage.
Our business consultants will help you choose the right kind of entity and guide you with the maintenance of the post-incorporation Compliances.
How much does it cost to register a Partnership Firm in India?
Pay as you go grow pricing
All Inclusive Pricing - No Hidden Fee
Basic
₹5899
all inclusive fees
- Partnership Deed
- Stamp Paper Purchase 1
- GST Registration
- LEDGERS Accounting Software
- GST eWay Bill Software
- Business Current Account 2
Standard
₹7899
all inclusive fees
- Partnership Deed
- Stamp Paper Purchase 1
- GST Registration
- LEDGERS Accounting Software
- GST eWay Bill Software
- Business Current Account 2
- Online Payment Gateway
- 3 Month GST return filing
Premium
₹12899
all inclusive fees
- Partnership Deed
- Stamp Paper Purchase 1
- GST Registration
- LEDGERS Accounting Software
- GST eWay Bill Software
- Business Current Account 2
- Online Payment Gateway
- 3 Month GST return filing
- Trademark Filing
- 1. Stamp paper purchase support. Stamp duty charges payable by client on actuals.
- 2. Business Current Account and Payment Gateway powered by ICICI Bank Limited. Subject to terms and conditions of ICICI Bank Limited.
- * Charges applicable extra for Partnership Firm registration with Registrar of Firms of the respective states. This is an optional process after partnership firm documentation.
Partnership Bank Account Opening
Open a new or link your existing ICICI bank current account with LEDGERS for seamless bank account reconciliation, account balance check and sending of payments through NEFT / RTGS / IMPS.
Open a new or link your existing DBS bank business account with LEDGERS for seamless bank account reconciliation, account balance check and sending of payments through NEFT / RTGS / IMPS.
Bank Account Opening
The Reserve Bank of India has laid out Know Your Customer (KYC) norms for opening of current account in the name of a partnership firms and all Banks have procedure to open partnership current account in business name based on partnership deed. Partnership deed is required to open a current account or business account for a partnership firms.
How many people are required to start a Partnership Firm?
In a Partnership firm, a minimum of 2 members are required and a maximum of 20 partners are allowed.
Who can be a Partner in a Partnership firm?
An individual who is an Indian citizen and a resident of India can partner in a Partnership firm. Nonresident Indians and Individuals belonging to Indian Origin can invest in a Partnership only with the approval of the Government.
What documents are required to register a Partnership firm?
For the partners, it is necessary to submit a PAN card along with the identity and address proof. It is recommended to draft a Partnership Deed which is to be signed by all the Partners.
How much Capital is required to start a Partnership?
A Partnership firm can be started with any amount of capital. There is no minimum requirement as such.
What are the advantages of Registering a Partnership firm?
It is very advisable to register a Partnership firm as a Registered Partnership Firm can file a suit in any court against any of the Partners or firm for the enforcement of any right arising from the contract referred by the Partnership Act.
Also, only a Registered Partnership Firm can claim set-off or other proceedings in a dispute with a party.
Is a Partnership firm a Separate Legal entity?
The Partnership firm and the partners are the same in the eyes of the law. In Partnership firms, the liability of the Partners is also unlimited and all the Partners are said to be jointly and severally liable for the liabilities of the firm. Hence, No Partnership firm doesn't have separate legal existence of its own.
Is it Compulsory for Partnership to File Income Tax Return?
A Partnership Firm must file the returns of Income irrespective of the number of profits or losses made by the Partners.
Can a person Transfer a Partnership Firm?
There are restrictions on the Transfer of ownership interest in a Partnership Firm. A Partner cannot transfer his or her interest in the firm to any person without the consent of all other partners.
What is Partnership Deed?
A Partnership deed is an agreement between the Partner that highlights the terms and the rules of the Partnership among the Partners.
Why is a Partnership deed necessary?
The Partnership deed lays down all the Terms and Condition of the Partnerships. As it regulates the rights and duties of each partner. A Partnership deed is a very crucial document.
How can I transfer to my Partnership firm?
There are restrictions on the transfer of the Partnership Firm. A Partner cannot transfer his / her interest in the firm to anyone without the consent of all other partners.
Is audit required for a Partnership?
In the case of Partnerships, it is not necessary to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criteria.
Can I convert my Partnership firm into a Company or LLP?
Yes, there's a specified procedure for converting a Partnership firm into a Company or LLP. However, the procedure is very cumbersome and time-consuming. It will be wise if an entrepreneur considers starting an LLP or a Company instead of a Partnership firm.
How to open a bank account for a Partnership firm?
To open a bank account for a Partnership firm a registered Partnership deed along with an identity proof and address proof of the Partner is to be provided.
How will IndiaFilings help you in Partnership Registration?
An associate from IndiaFilings will understand your business requirements and help you start a Partnership firm by drafting the Partnership deed.
Based on the requirement we also help the partnership firms to become Registered Partnership Firms.
Last updated: Feb 27, 2021
