Starting a business with like-minded individuals?

A Partnership Firm might be a perfect legal structure for you. A Partnership Firm is one form of business structure most frequently used by small and medium enterprises. It means two or more individuals come together to carry out a business and agree to share profits and losses of the business carried out by all or anyone of them acting for all. This agreement is laid out in a Partnership Deed. The Partnership Firms in India are regulated by the Indian Partnership Act, 1932. This Act deals with rights, duties and liabilities of partnership.

Here's everything you need to know about Partnership Firm Registration.

Partnership Firm Registration Process

Follow these simple steps to register your Partnership Firm:

•  Draft a Partnership Deed:

           The Partnership Deed is the foundational document that outlines:

1. 1.  Name and address of the firm where the partners reside;
   2. Nature of the business;
   3. Profit and loss sharing ratio;
   4. Roles and Responsibilities of each partner;
   5. Ensure the deed is on the stamp paper and notarized to make it legally binding.

• Choose a Name of the Firm:

1. 1. Select a name that is unique and does not violate any existing Trademarks or sounds offensive / obscene.

• Apple for Registration:

1. 1.  Submit the application to the Registrar of Firms in your jurisdiction with the following documents:
   2. Application Form (Form 1);
   3. A copy of your notarized partnership deed;
   4. Affidavit declaring the accuracy of details provided;
   5. PAN cards and address proofs of partners;
   6. Address proof of the business (electricity bill, rental agreement, etc.)

• Pay the fees:

1. Pay the prescribed fees, which varies by State.

Fees for Partnership Firm Registration

• The amount that partnership firms are required to pay as registration fee also differs from one state to another. In general, the registration fees could lie between hundred rupees and a thousand rupees. 

• They may also come with a little charge if you are to register through the government portal online.

Documents Required for Partnership Firm Registration

• Partnership Deed: (Copy of a signed document with all the partners).

• Proof of Address: Copy of the rental agreement of the registered office or utility bill.

• Identity Proof: Aadhar Card, Passport, Voter ID card of all partners.

• Photographs: Picture with passport size of all partners/ Pictures of all the partners in passport size.

• PAN Card: The partnership firm and partners.

• Copy of GST registration: (If the GST registration has been done).

Is it compulsory to Register a Partnership Firm

No, it is not mandatory to register a partnership firm under the Indian Partnership Act, 1932. However, registration is strongly recommended due to the legal and operational benefits it offers.

Consequences of Non-Registration of a Partnership Firm

While you can still operate a partnership firm without registration, there are significant drawbacks: 

• Limited Legal Recourse: The firm cannot file a lawsuit to enforce its rights against third parties.

• No Legal Recognition: Legal rights cannot be exercised by partners where they seek protection or seek to take an action against partners or third parties.

• Loss of Tax Benefits: A firm that has not registered under the Act cannot apply for certain tax losses and allowances under the ITA.

• Credibility Issues: Unregistered Firms might face difficulties in securing loans or business contracts.

Partnership Firm Registration in Maharashtra

The application process for registering a partnership firm is slightly different from the general procedure, which is between the applicant and the registrar of the district where the firm is situated, while the Partnership Firm registration in Maharashtra is registered under the Maharashtra State Registrar of Firms. Individual fees and forms for specific states should be verified with the local RoF office or through therein on their webpage.

GST Registration for Partnership Firm

• It is compulsory to register for GST if the annual turnover of your partnership firm crosses the threshold limit ( ₹20 lakh in a financial year). 
• It is also required to apply for GST if:

1. It is engaged in inter-state supply of goods or services, irrespective of the turnover.
2. This is a business transaction activity that can include selling of products or services on the cyber space regardless the economic turnover.
3. It provides goods or services to or from a category ‘A’ state, for example, Jammu and Kashmir, Ladakh, and so forth, and it has got a turnover of ₹10 lakhs or more in an FY.

Documents required for GST registration of a partnership firm include:

1. Partnership Deed.

2. Pan card of the firm and all partners of the firm.

3. Partnership proof of identity and proof of address.

4. Balance Sheet of the firm.

5. Proof of Business Premises.

Registration of Firm under the Partnership Act

Partnership firms may be registered by filing the Partnership Deed to the Registrar of Firms as per rule provided in the Indian Partnership Act, 1932. Although doing registration is not compulsory it offers a legal framework on the partnership especially when it comes to large or formal business entities.

Conclusion

Although there is no requirement for the partnership firm registration it is beneficial in many ways such as legal, more revenue exempted, efficient functioning etc. It is rather easy and can be done both on the Web and offline, and the expenses would be rather low. Before proceeding with the registration process make sure that you’re getting through the right channel and that you’ve got all the appropriate documents.

Disclaimer

The information provided in this blog is purely for general informational purposes only. While every effort has been made to ensure the accuracy, reliability and completeness of the content presented, we make no representations or warranties of any kind, express or implied, for the same. 

We expressly disclaim any and all liability for any loss, damage or injury arising from or in connection with the use of or reliance on this information. This includes, but is not limited to, any direct, indirect, incidental, consequential or punitive damage.

Further, we reserve the right to make changes to the content at any time without prior notice. For specific advice tailored to your situation, we request you to get in touch with us.