Partnership Firm Registration

Partnership firm is amongst the most preferred business structure in India as it has several advantages such as it can be formed fast, less compliances, decisions are taken quickly among others.

It comes into existence when two or more persons undertake to start a business on the agreed terms and conditions. These terms are mentioned in a partnership deed, and once this deed is registered with the Registrar of Firms, the partnership firm becomes official.

Salient Characteristics of a Partnership Firm

If you are preparing to register a partnership firm online in India, know its features:

1. Minimum 2 Partners (There is however no limit on the maximum number of partners as per the Indian Partnership Act, 1932).
2. The business operates under a legal document called a partnership deed.
3. Application for registration accompanied by required documents should be made to theRegistrar of Firms.
4. No one in the partnership can assign their rights or interests without the consent of all the partners.
5. All partners have unlimited liability.
6. The partnership is not a distinct entity from the partners (no legal person).
7. The firm may trade as anything (as long as it is unique) other than the name that is on the register of companies.

Eligibility Criteria for Registration of Partnership in India

The requirements for registration of partnership firm are as follows:

1. A minimum of two individuals must register in pairs.
2. The extent to which partners are involved day-to-day around the office may or may not be shared.
3. Risk of business shared among the team.
4. The partnership deed should be accepted by all the partners Among them.

Rights and Liabilities of Partners

As per the partnership agreement:

1. Shareholders do not receive a regular fixed wage or remuneration.
2. The profit and loss is divided equally, unless otherwise provided for in the deed.
3. No interest on capital is paid except out of profits.
4. Bonus – In case any partner has contributed more money than agreed-upon capital, then that partner is entitled to receive interest of 6% p.a.
5. Partners can be reimbursed for funds they spent on behalf of the business.
6. A partner who sustains a loss through his fault must make it good to the firm.

Partnership Deed

The deed of partnership is the life-blood of the firm. It includes:

1. All property, rights, and assets of every kind whatsoever, heretofore owned or hereafter acquired by the company.
2. All property acquired with firm funds is firm property.
3. All corporate assets shall be used only for company business.

Profit Sharing Among Partners

According to the deed:

1. Instead, if a partner profits personally from any transaction which concerns the firm, that profit accrues, so far as we know, to the firm.
2. Partners cannot run competing businesses. If they do, the profits of those business must be turned over to the firm.

Partner as the Firm’s Agent

Each partner is agency of the firm. Their decisions are binding on the firm unless they overstep their authority. Theories of implied authority do not permit partners to:

1. Refer disputes to arbitration.
2. Open bank accounts in their own names on behalf of the firm.
3. Drop firm’s cases or withdraw ongoing lawsuits.
4. Admit liability in legal cases.
5. Purchase or sell land for the firm.
6. Take sole control of a new firm or partnership.

Procedure for Registration of Partnership in India

Partnerships—Partnership businesses are required to register in the state in which they are operating. It is both online and offline:

Step 1: Choose a Name

Choose an unique name that is not registered already to any company preferred by you.

Step 2: Draft a Partnership Deed

The deed must include:

1. Firm Name and address and Partners
2. Contact details
3. Nature of business
4. Duration of partnership
5. Profit/loss sharing ratio
6. Capital contributions
7. Solvency and other provisions

Step 3: Apply for PAN Card

The company will have to get a PAN card for tax purposes.

Step 4: Apply and What to Submit

Complete the registration form including details about the firm and partners and send it to the Registrar.

Step 5: Pay Fees & Stamp Duty

Pay registration fees (cost depends on the state).

Step 6 : Registration of the Partnership Deed

The deed is to be drawn on a stamp paper and to be signed by all partners in presence of a Notary.

Step 7: Obtain the Certificate of Registration

Upon verification of your documents, you will get a partnership registration certificate, and you can commence the business in the name of the firm.

Our Help/solutions for registration of partnership in India:-

At GarudaMudra, we offer full support on partnership registration in India. Our services include:

1. Collecting necessary details
2. Drafting the partnership deed
3. Reviewing applications carefully
4. Filing and delivery of the registration statement documents

Thanks to GarudaMudra, you will be able to register a partnership firm without any hassle and start your business quickly.