Online Partnership Firm Registration in India

No. The Partnership Act recognises both registered and unregistered firms, so registration is not compulsory. It is worth doing because of what non-registration costs you, which is the next answer.

Many businesses run as an unregistered partnership until they are stable and register later. A firm can be registered at any time after it is formed.

An unregistered firm cannot file a suit against a partner or against a third party, and a partner cannot sue the firm to enforce their own claim.

Third parties are unaffected and can still sue the firm to enforce what they are owed. Registering the firm at any point afterwards removes these effects.

Only a registered firm can claim a set off, the mutual adjustment of debts the two sides owe each other, or bring other proceedings in a dispute with a third party.

Only a registered firm can file a suit in any court against the firm or the other partners to enforce a right arising from the contract, or a right conferred by the Partnership Act. An unregistered firm can be registered at any point after it is established.

There is no minimum amount. A firm can be started with whatever capital the partners agree to contribute.

Contributions can be tangible, such as cash or premises, or intangible, such as goodwill or intellectual property, and the partners can contribute in equal or unequal ratios.

Two partners are enough to form a firm. A partner must be competent to contract, so a minor cannot be one, although a minor can be admitted to the benefits of a partnership.

A partner appointed to the firm must be an Indian citizen and resident in India. A non-resident Indian or a person of Indian origin can invest in a partnership only with prior government approval.

The application is made to the Registrar of Firms with jurisdiction over the firm’s place of business, in the prescribed form and together with the partnership deed.

The Registrar issues the Certificate of Registration at the end of the process. The procedure and the time it takes differ from one Registrar to another.

The main object and the activities of the firm, and the major clauses: capital contribution, the profit sharing ratio between the partners, and how the firm is managed and administered.

The signed deed must then be duly stamped and notarised.

Stamp duty is what makes the deed valid, and the amount depends on the capital the partners contribute.

The rate is prescribed by the State Stamp Act, and it differs for every state.

Yes. Notarisation of the partnership deed is necessary in every case, for a registered and an unregistered firm alike.

Once the partnership deed has been executed, or once it has been registered with the Registrar of Firms.

The physical PAN card is delivered to the firm’s registered place of business after the Income Tax Department dispatches it.

Registration can take 12 to 14 working days.

The Registration Certificate is then issued according to the rules of the state concerned, so the total is subject to government processing time and varies from state to state.

The firm must maintain books of accounts and financial statements, and file an income tax return for each financial year before the due date under the Income Tax Act.

There is nothing equivalent to the annual filings a company or an LLP owes the MCA, which is why the compliance load is the lightest of the five structures.

There is no requirement to prepare audited statements every year.

A tax audit may still be necessary depending on turnover and a few other criteria under the Income Tax Act.

Yes, a partnership firm can be converted into either, depending on what the business needs.

The procedure is cumbersome, expensive and time consuming in both directions, so it is worth considering an LLP or a company at the outset if you expect to need one later.