Partnership Registration

Opposite to the Limited Liability Partnership and Private Limited Company types, a General Partnership consists of a minimum of two people who agrees to manage a business based on the terms and conditions set in a Partnership Deed.

  • On call discussion about business model
  • Partnership deed drafting
  • Partnership deed registration
  • Partnership PAN No
  • Stamping and Notary of Partnership Deed

Start Your Application

A business having multiple promoters and directors can choose to register as a Partnership Firm. Here is more you need to know about Partnership Firm Registration.

What is a Partnership Firm Registration?

A partnership firm is a well-recognized business structure formed with mutual consent of all the partners for a profitable purpose. The firm is managed, owned and controlled by set of people that are known as partners and have some share capital in the firm.

Partnership firms are distinguished as registered and non-registered firms. It is not mandatory to register a partnership firm but it is advisable to do so. Partnership Firm registration provides various benefits that do not apply to the non-registered ones. It can be easily registered under the Partnership Act, 1932 with very less documentation and formalities.

Pros and Cons of Partnership Firm Registration:

Pros of the Partnership Firm Registration:

1. Easiest Business Structure:

As mentioned Partnership firms are of the easiest business structure that can be started by formulating a partnership deed. Hence it can be started whenever the partners want, whereas other firms require at least 10-15 days to cover up the formalities like obtaining DSC, DPIN name approval, etc.

2. Ease in Decision making:

It’s easier and faster to make a decision in a partnership firm as you don’t have to follow regulations to pass a resolution. A partner can undertake transactions on behalf of the firm without any consent of other designated partners.

3. Raising Funds:

Incompetence to other firms such as proprietorship firms, funds can be easily raised in a partnership firm. Multiple partners are capable of making more feasible contribution while banks recognize a partnership firm more favorable for sanctioning credits and loans.

4. Easy management without any disputes:

All the partners are designated works and responsibilities as per their capability as mentioned in the partnership deed that avoids any type of conflicts between the partners.

Cons of the Partnership Firm Registration:

1. Unlimited liabilities:

The liabilities of partners are not limited in the partnership firm that acts as the biggest drawback for the partners. In case of debt or any other misfortune, their personal assets can be used to clear the debts.

2. A maximum number of members:

The maximum number of partners in a partnership firm is limited to 20. Whereas, there are no limitations of members/partners in a Limited liability partnership firm.

3. Less trustworthy for the general public:

No doubt the partnership firm is easy to form and can work without registration. It can also operate without any strict rules and regulations. These factors make it less trustworthy in the eyes of the general public.

4. Abrupt Dissolution:

A partnership firm can be easily dissolved by the death or insolvency of any partner. Such conditions hamper the business. Whereas, LLP is safe and enjoys the benefits of perpetual succession.

Difference between Partnership Firm and Limited Liability partnership Firm:

Most of the people are confused between Partnership firm and Limited Liability partnership Firm. Here are some chief differences between both of them:

Point of Difference

Limited Liability Partnership Firm

Partnership Firm

Act of Registration

LLP is registered as per the provisions of Limited Liability Partnership Act, 2008.

Partnership Firm are registered as per the provisions of Partnership Act, 1932.

Registered to

LLP registration is done with compliance of Ministry of Corporate Affairs (MCA)

Partnership Firm registration is done with compliance of Registrar of Companies (ROC).

Liability of the Partners

One of the chief benefits of LLP registration is that the partners of the firm are limited to their liabilities which means their personal assets remains unharmed during the times of crisis and debt.

In partnership firm respective partners are liable for the liabilities of the firm

Separate Legal Entity

LLP is considered as the separate legal entity

Partnership firms are not considered as separate legal entity.

Minimum and maximum number of members

Minimum: 2 partners

Maximum: no limit

Minor cannot be considered as a partner

Minimum: 2 partners

Maximum: 20 partners

Minor can be considered as a partner

Type of Agreement

LLP Agreement is made between the partners to start a firm. It defines their roles, methodology, terms and conditions.

Partnership deed is made between the partners to start a firm. It defines their roles, methodology, terms and conditions.

Perpetual Successions

LLP enjoys the benefits of perpetual succession and cannot be dissolved by the death or insanity of any partner.

Partnership firm can be dissolved by the death, retirement or insanity of any other partner

Compliances:

LLPs have to file annual returns to the Ministry of Corporate Affairs

Partnership firms do not require to file annual returns.

Cost

LLP registration is costlier than the partnership firm registration

Partnership firm registration is cheaper than the LLP registration

Conversion/Transferability

  • Shares can be transferred to from one person to another with the consent of all the partners in the firm.
  • The transferee does not automatically become a partner
  • LLPs cannot convert into partnership firm but can be further easily converted into Private or Public Limited Company.
  • Shares can be transferred to from one person to another with the consent of all the partners in the firm.
  • Conversion of transfer of the partnership is somehow a lengthy process.
  • Partnership firm can be further converted into LLPs and Pvt. Limited Company but is quite difficult and burdensome work.

Documents Required for Partnership Firm Registration:

Here is the list of Important Documents Required for the Partnership Firm Registration:

  • Identity Proof
  • Passport Size photographs of all the Partners
  • PAN Card
  • Address Proof of all the Partners
  • Office Address Proof

Partnership Deed:

It is the agreement made within the partners which defines their rules, duties, methodology, functioning and shares. It helps to avoid future conflicts and disputes between the partners. It is created and signed by all the members on the Judicial Stamp Paper that costs around Rs. 2000/-

PAN Card:

All the designated partners of the firm are required to submit their PAN cards as a proof of their identity.

Address Proof:

All the partners have to submit a copy of their address proof which can be either their Aadhar card, voter id, ration card, driving license, etc. the address and details given in the proof should match PAN card details.

Office Address Proof:

Address proof of the respective working place has to be submitted. In case of rented property, an applicant has to submit Rent agreement along with a utility bill such as electricity, water, gas bill, property tax bill, etc. Apart from it he/she has to submit the No Objection Certificate or NOC from the landlord. If the place it owned then the applicant has to submit a utility bill along with a NOC from the owner.

PAN card of the Firm: The partners of the firm have to apply for the PAN Card of the firm. Form 49A is filed online at https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html.

Partnership Firm Registration Procedure:

Step 1: select an appropriate name

Step 2: File an application

Step 3: Preparation of Partnership Deed

Step 4: Submission of documents

Step 5: Verification of Documents and Issuance of Registration Certificate

1. Select an appropriate name for the firm:

Select a name for your firm that is unique and do not contains words like emperor, empire, etc. which denotes sanction of the government.

2. File an Application:

First of all, the applicant has to file an application in Form 1 of partnership firm registration. An application is filled with Registrar of Firm of the respective state where the firm is located. The application is filled in prescribed format along with specific fees amount.

3. Preparation of Partnership deed:

Partnership deed is prepared with consent of all the partners on the stamp paper. Below given components are the parts of partnership deed:

  • Details of the partners and firm such as their name, address, qualification, etc.
  • Nature of the firm or business activities
  • Capital contribution made by all partners
  • Shares/Interest of all the partners
  • Profit/loss sharing ratio among all the partners
  • Rights, duties, salaries, commissions, or payable amount of the partners.
  • Details of loans provided by the partners
  • Circumstances or process that would be followed in case of death or retirement of any designated partner
  • Other clauses made with mutual consent of all the partners

It is important and must be prepared carefully. Companies scan take help of someone experienced to create partnership deed.

4. Submission of the documents:

Once you have prepared the partnership deed, now submit all the required documents along with it.

5. Verification of documents and issuance of Registration Certificate:

After submission documents are closely verified by the authorities and if all is according to the provisions of act, registration certificate would be issued to your firm.

Testimonial

Related Articles

Our Partners

Forbes 30
KU
Stripe
DHFL
Bank of Maharashtra
Food Panda