Partnership Firm Registration Services
Register a partnership firm with ease. While our comprehensive guide will walk you through every step, our professional registration services will ensure everything is done legally correct. We also extend our support post-registration for compliance.
A partnership firm is one of the popular forms of business where two or more individuals come together to carry out a business and share the profits and losses. Under The Indian Partnership Act 1932, the partnership is defined as the relationship between individuals who have agreed to share the profits of a business carried on by all or any of them acting for all. One of the most attractive features of a partnership is its simplicity and flexibility, which allows its partners to make use of their combined skills, resources, and capital to achieve greater business success.
Even though it's not mandatory to register a partnership firm, it's highly recommended to register as it's highly risky. To register your partnership, the process starts by registering the partnership with the Registrar of Firms where your business is located. You can initiate the partnership firm registration process either at the firm's inception or in the future during your business operation.
A partnership deed is the foundation of the registration process, and this agreement outlines the rights, duties, and profit-sharing arrangements of each partner.
Advantages of Partnership Firm
Registering your business as a partnership comes with a lot of features and benefits. Here are a few top features that make partnership a preferred business model for many entrepreneurs.
Simple and cost-effective
Forming a partnership firm involves minimal legal complications and registration costs, making it an attractive structure to register your business.
Mutually agreed contract
The partnership deed serves as a clear and legally binding agreement, where the roles, responsibilities, and profit-sharing arrangements are mentioned.
Shared ownership and control
Partners join together to own and manage the business, building a collaborative environment where decisions are made jointly.
Equitable profit and loss distribution
Profits and losses arising in a partnership are shared among partners according to a pre-determined ratio agreed upon during the incorporation.
Flexibility in decision-making
The partnership structure offers flexibility in decision-making, allowing you to make quick decisions and adjust to market changes.
Tax advantages
The pass-through taxation structure of partnerships helps to eliminate the double taxation faced by corporations.
Our Services
At Benchmark we offer you a range of services to support your partnership firm registration, providing you with a smooth and efficient process while following all the legal and regulatory requirements. Our service offerings include:
- Drafting and customisation of partnership deeds to fit your business-specific requirements, including profit-sharing ratios and partner obligations.
- End-to-end guidance on filing and submitting Form 1 and any other necessary forms to the Registrar of Firms.
- Advisory on selecting a legally compliant and unique firm name as per applicable regulations.
- Preparation and verification of supporting documents, including affidavits, partner identification proofs, and firm address proofs.
- PAN and TAN application processing for your partnership firm to ensure compliance with tax obligations.
- Guidance on establishing banking facilities and opening a business bank account for your partnership firm.
- Liaison with regulatory authorities to address discrepancies or queries during the registration process.
- Advisory on compliance with state-specific registration requirements and legal formalities.
- Support in managing post-registration compliance, including drafting agreements for admitting or retiring partners.
- Periodic updates on amendments in the Indian Partnership Act, 1932, and their implications for your business.
How can Benchmark help?
Learn how Benchmark can help with partnership firm registration by guiding you through legal requirements, drafting deeds, and ensuring smooth documentation for a hassle-free process.
Challenges of Partnership Firm
While we cannot deny the benefits of a partnership firm business structure, it's important to know the limitations and the potential challenges that come with this business structure.
- No perpetual succession: Partnership dissolves upon a partner's death, retirement, or insolvency.
- Unlimited liability: Partners' personal assets are at risk for the firm's debts.
- Limited capital: Restricted to partners' contributions, hindering growth.
- Mutual agency: Each partner's actions bind the firm, potentially causing conflicts.
- Fewer tax benefits: Compared to other business structures, partnerships may have fewer tax advantages.
Documents for Registration of Partnership Firm
To register your partnership firm, you have to submit certain documents to the registrar.
- Application for registration: The formal application process gets started with Form 1.
- Certified copy of partnership deed: You have to submit the original partnership deed, the legal document governing the partnership.
- Copy of affidavit: An affidavit, duly signed by the partners, confirming the accuracy and authenticity of the information on the partnership deed.
- PAN card and address proof of partners: Each partner in a partnership firm should provide their PAN card and a valid proof of address.
- PAN card and address of the firm: The partnership firm must have a PAN card that serves as proof of the firm's principal place of business.
Process to Form a Partnership Firm
To register your business as a partnership, you have to follow a carefully outlined registration process. This process ensures a solid foundation for your partnership registration process. Here is the step-by-step process to register your business as a partnership firm.
Step 1: Decide on the Business Details
- Nature of Business: Identify the type of business activity the firm will undertake.
- Firm Name: Select a nice, distinctive name for your partnership firm that obliges with the trademark and legal requirements; that is, to avoids resemblance with any existing businesses. The name should reflect the nature of the business.
Step 2: Draft the Partnership Deed
- Prepare a partnership deed that outlines the rights, duties, and responsibilities of all partners.
- Include details such as:
- Profit and loss sharing ratio.
- Capital contributions by each partner.
- Rules for adding or removing partners.
- Dispute resolution methods.
Step 3: Gather Required Documents
- Collect the following documents for registration:
- Partnership Deed: Certified true copies.
- Affidavit: Stating the intent of the partners to carry on the business.
- Address Proof: Utility bills or rental agreement for the firm's principal place of business.
- Identity Proof: PAN card and Aadhaar card of all partners.
- Photographs: Passport-sized photographs of all partners.
Step 4: Submit Application for Registration
- Fill out Form 1 (Partnership Registration Form) and attach all required documents.
- Submit the application to the Registrar of Firms in the state where the business is located.
- Pay the prescribed registration fees.
Step 5: Verify Compliance with State-Specific Rules
- Different states may have specific rules for registering partnership firms.
- Ensure all documents and forms adhere to the local requirements to avoid delays.
Step 6: Review by Registrar of Firms
- Once the documents are submitted, the Registrar will review the application and supporting documents for accuracy and completeness.
- If everything is in order, the Registrar will approve the application.
Step 7: Obtain the Certificate of Registration
- If everything is in order, the firm will be approved, and you'll receive a Certificate of Registration. This certificate officially recognises your firm as a legal partnership.
- Keep this certificate safe, as you'll be needed for compliance and other legal requirements later.
Step 8: Post-Registration Activities
- Open a bank account in the firm's name using the registration certificate and deed as proof.
- Depending on your business, you may also need to apply for registrations like GST, MSME, or Professional Tax.
- To stay compliant, make sure you regularly update your records and submit any necessary forms on time.
Partnership Deed
The partnership deed, which is also referred to as a partnership agreement, outlines the necessary guidelines required for the smooth and successful running of a partnership. It's a legal document that's agreed upon and signed by the partners who join together to form a partnership business.
In case of disputes between the partners, this partnership deed helps to resolve the conflict or any disagreements regarding the partnership norms. The partnership deed gives the partners a clear idea of the roles of each partner, ensuring smooth operations of the partnership firm.
Here is a list of things that you can find in a partnership deed:
- Firm name and partner information
- Description of the nature of the business
- The intended lifespan of the partnership
- Amount of capital each partner will contribute
- The agreed-upon ratio for distributing profits and losses
- Any remuneration, such as salaries or commissions
- The permissible amount of drawings each partner can make from the firm
- Detailed outline of the rights, duties, and obligations of each partner
- Procedures for admitting new partners, and handling the retirement of existing partners
- Methodology for maintaining the firm's accounts and conducting audits
Checklist for Partnership Registration
Here is the checklist to make sure that the essential elements are in place before you initiate the registration process.
- Create a well-drafted partnership deed
- A minimum of 2 partners should join together
- Maximum of 50 partners per partnership
- Choose a unique and appropriate name
- Establish a principal place of business
- Obtain a PAN card and bank account for the firm
Compliance After Partnership Registration
Once the partnership firm registration process is completed, the successful operation of your partnership firm demands ongoing compliance with a range of tax and regulatory functions. These obligations are important for maintaining a legal standing and avoiding penalties.
- Obtaining a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
- Regardless of profitability, every partnership firm in India must file an annual Income Tax Return.
- Partnership firms with an annual turnover exceeding Rs. 1 Crore must undergo a tax audit conducted by a qualified chartered accountant.
- Businesses with an annual turnover exceeding Rs. 40 lakhs in annual income must register for GST.
- Partnership firms are required to deduct TDS on certain payments, such as salaries, rent, and professional fees.
- If your partnership firm employs individuals, ESIC registration is mandatory.
Bottom Line
The process of building a successful partnership firm starts with a solid legal foundation. At Benchmark, we are committed to simplifying your partnership registration process and ensuring your business gets started in a secure and compliant way. Our team of experts will guide you through every step, from creating a partnership deed to understanding the intricacies of partnership deed registration.
Get expert assistance for your partnership firm registration - from drafting deeds and choosing a name to filing forms and handling documentation. We'll make the entire process simple and straightforward for you.
FAQs
Is it mandatory to register a partnership firm in India?
No, registration of a partnership firm is not compulsory under the Indian Partnership Act, of 1932. However, it is highly recommended due to the numerous legal and operational benefits it offers.
What is the cost of registering a partnership firm?
The partnership firm registration cost varies depending on the state in which you are registering and the professional fees charged by legal experts or service providers. However, it is generally a nominal expense compared to the advantages it confers.
What is the role of the partnership deed in the registration process?
The partnership deed is a necessary document that outlines the rights, duties, and profit-sharing arrangements of each partner. It serves as the base of your partnership and must be submitted in its original, certified form during the registration process.