Register a Partnership Firm

To start with Partnership in India, minimum two persons shall come together to carry on certain activities with the object of earning Profit. Here, a Partnership Firm cannot be formed with charitable object. Further, the Partners shall enter into agreement named Partnership Deed, whether registered or unregistered.

A Partnership Firm, under Indian Partnership Act, 1932, is classified under two main heads being Unregistered and Registered Partnership Firm. Both types of firm are legal and valid to carry on the business under the Act.

A Partnership Firm can be started with any amount of capital contribution by the Partners as there is no minimum requirement prescribed in this regard. The Partners can contribute in any amount agreed and in any form being tangible (cash, premise) or intangible (goodwill, intellectual property). The Partners can introduce capital in any ratio, equal or uneven.

Minimum 2 Partner are required to form a Partnership Firm which shall not exceed 50 number of partners.

The Partner to be introduced and appointed in the Firm must Indian Citizen and a resident in India. Non-Resident Indians and Persons of Indian Origin can only invest in a Partnership with prior approval of the Government of India. In addition to above, the individual must be at the age of 18 or above i.e. not a minor and competent to enter into contract. A minor can be introduced to Partnership Firm only for profit.

The documents including PAN card and address proof of all Partners will be required to establish a Partnership Firm. Further, for Partnership Firm and deed Registration in India the Address of Business Place such as utility bill and rent agreement, if any will also be required.

Only a Registered partnership firm can claim a set off (i.e. mutual adjustment of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party. Hence, it is advisable for partnership firms to get itself registered sooner or later. Also, only a registered partnership firm can file a 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. Hence it is advisable to get a partnership firm registered. An unregistered Partnership Firm can get registered at any point of time after its establishment.

The application for Partnership Firm Registration in India is submitted with the Registrar of Firms (RoF) under whose jurisdiction the Place of Business of Partnership Firm falls. The application of Registration is made in required form along with submitting the Partnership Deed. At the end of registration procedure, the Certificate of Registration is issued by respective RoF.

The Partners should specifically mention about the main object and activities along with major clauses related to capital contribution, profit sharing ratio of the partners, Management and Administration of Partnership Firm. Further, the Signed Partnership Deed shall be duly stamped and notarised.

While formation or Registration of Partnership Firm in India, the stamp duty on the Deed according to the capital contribution of the Partners in the partnership Firm. The rate of Stamp Duty varies based on State where the Business Place of Partnership Firm is situated. Further the Notary on the Deed is a must requirement.

The PAN and TAN in the name of Partnership Firm can be applied either after entering into Agreement or after registration of Partnership frim with respected RoF. The physical copy of the PAN will be received at the Business Place only after being dispatched by the Income Tax Department.

The registration of Partnership Firm in India can take 12 to 14 working days. However, the issuance of Registration Certificate can take place as per the regulations of concerned state. The time period for registration of Partnership Firm is subject to Government processing time.

The Partnership Firm shall maintain the Books of Accounts and Financial Statement. The Income Tax Return shall be filed for the respective financial year before the due date as per Income Tax Act.

Partnership firms do not need to prepare audited statements for each year. However depending on the turnover and  a few other criteria, a tax audit statement might be necessary.

Alike every other entity, there are certain criteria laid down for mandatory registration under GST. Following are few general criteria for mandatory registration:

An aggregate turnover exceeding Rs. 20 lakh in a financial year mandates registration for a dealer or service provider under this law. However, for dealers conducting business in north-eastern states of India, an aggregate turnover exceeding Rs. 10 lakh mandates a registration. Any online platform operator. Partnership Firm engaged in inter-state supply of Goods or Services. 

The Trademark Registration in not mandatory however beneficial for Partnership Firm. The name of the Partnership Firm is not protected under the Indian Partnership Act, 1932. Any other firm or organisation can use the name of Partnership Firm. Hence, to protect the name and brand value of the firm, one can voluntarily apply for Trademark. 

A partnership firm can be converted to a Private Limited Company or a LLP considering its requirements. However, the procedures to convert a Partnership firm into a Company or LLP are cumbersome, expensive and time-consuming. Thus, it is wise for many entrepreneurs to consider and start a LLP or Company instead of a Partnership firm.

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