Partnership refers to the affiliation of two or more individuals to execute a specific business activity. In the corporate regime, the Indian Partnership Act (1932) defines partnership as the clubbing of two or more individuals who have given their consent to share the profit generated via business carried on by all or any of them acting for all. In a corporate structure like proprietary business, a person confronts limitation on account of ability, skill, and fund to execute the business activities, besides liability that can show up anytime. Any firm which operates as a small or medium scale business can opt for this business structure, as there are fewer legal implications. It is not mandatory to get the partnership firm registration as per the Act, but registering a business imparts the partnership a legal identity. It helps in resolve disputes and settles claims against outsider entities. In this article, you will learn how to get a partnership firm registered in India.
Procedure to be Followed to Get Partnership Firm Registered in India
The growing use of technology has enabled the government to set up a digital version of registration and compliance requirements for business owners. Although an offline procedure is still in practice in India, few regions have entirely transformed the manual registration process into a digitized form.
Presently, the applicant who seeks to 6 firm registration can make an online application instead of a physical form before the Registrar of Firms (ROF). The step below will help you get a partnership firm registered through an online mode.
Read our article:Description on Registration of Partnership Firm in India
Select an Apt Name for Your Firm
One of the most notable facts related to name selection is that you cannot opt for a name that already exists in the public domain. Violation of such requirements can invoke severe penalties. To check whether the selected name is valid or not, make sure to visit the online portal of the ministry of corporate affairs.
Draft a Partnership Deed
The partnership deed is a legally binding document that laid the foundation of a partnership firm. It acts as an essential document for registration as it provides the following detail to the Registrar:
- Name & address of company & all partners
- Contact details related to partners
- Type of business
- Duration for which the partnership will remain in effect.
- Profit/Loss sharing ratio
- Rules regarding the firm’s solvency.
- Information about the capital proposed to be contributed by each partner.
In addition to that, such an agreement also encloses detail regarding the remuneration payable to partners, audit procedures, responsibilities of partners, etc.
Avail the PAN Card from the Respective Authority in the Firm Name
Regardless of registration number as per Act, a firm must apply for a PAN to the IT department, i.e., Income Tax Department. This can be applied depending on the firm’s current account. You will require the PAN to meet the tax obligations.
File an Application Regarding Registration
The registration application seeks a firm to render details such as the firm’s name, type of business, address where the firm is located, names & addresses of all partners, date on which the business was started. This form will then send to the Registrar in the area of the firm’s main office.
Submit the Relevant Documentation
Along with the application for registration, the given documents are to be furnished to the Registrar as a part of the registration process: –
- Registration application for partnership firm (Form 1).
- A certified real version of a partnership deed
- Specimen of Affidavit
- PAN Card issued in the name of the firm
- Proof of address regarding the partnership firm, lease and rent agreements, ownership deed, etc. are common admissible documents
- PAN Cards as well as the address proofs of all the partners
Make Payment Regarding Fees & Stamp Duties
A fee for registration & a stamp duty needs to be paid during the documentation submitted with the Registrar. Keep in mind that the fees to get a partnership firm registered in India to vary from state to state. The registration process shall remain incomplete until all dues are paid.
Legalize the Deed
First, to serve this purpose, transform the deed in a written form on a stamp paper for both partners. The partner’s approval in the form of a signature must prepare such a legal document. Keep in mind that the notary’s presence is mandatory to fulfill this requirement. Remember, the stamp’s value differs state-wise. The duly attested deed will then submitted to the Registrar for the purpose of registration.
Certification Granted By the Registrar
The Registrar, after in-depth verification of the provided documents, will grant the registration certificate. After a successful grant of certification, the firm will find its way to the record of the Registrar of Firms. The firm shall stand registered from the date of this entry. Soon after receiving this certificate, the partnership firm is required to affix the term ‘(Registered)’ after its name.
Benefits Offered by the Partnership Business Model
- Unlike other business models such as private and public limited companies, the decision-making in partnership encounters fewer obstacles due to the absence of stringent compliances. The decision-making in a partnership firm predominately revolves around the active partners.
- Proprietorship firm is generally more expose to financial distress because of unlimited liability. This is the reason why most financial avenues avoid them when it comes to providing financial assistance. However, that is not the case with a partnership firm.
- Proprietorship firms are easy to register, unlike other business structures in India.
Nearly every state in India has adopted a digital version of the registration process. The online process is simple and straightforward as compared to the offline method. Now registration seekers do not have to go through the tedious conventional process to get their partnership firm registered in India.