Partnership Company Registration in India

Definition

• A partnership company is an arrangement where two or more individuals collaborate to conduct business operations with the goal of earning profit. Profits and liabilities are shared among the partners.

Establishment

• A partnership firm is established by two or more partners with a mutual agreement to share the business profits and responsibilities. The primary legal document required is the Partnership Deed.

  
  

Governing Law

• The Indian Partnership Registration Act of 1932 governs partnership registration in India. This law defines a partnership as a relationship between individuals who have agreed to share the profits of a business carried out by all or any one of them acting for all.

  
  

Number of Partners

• For a partnership firm in the banking business, the maximum number of partners is 10. For other types of businesses, the maximum is 20 partners.

  
  

Legal Entity

• While the partners themselves are considered separate legal entities, the partnership firm is not. The firm cannot independently own property, be a debtor or creditor. The assets, liabilities, and credits belong to the partners.

Partnership Deed

• The Partnership Deed is a legal document that outlines the terms and conditions of the partnership, including the distribution of profits and losses among partners. It helps prevent future misunderstandings and disputes.

  
  

Business Conduct

• Each partner is authorized to conduct business on behalf of the other partners, meaning that decisions made by one partner are binding on the entire partnership.

  
  

Advantages

• Partnership registration is cost-effective, simple to set up, and does not require stringent compliance. It is an attractive option for small businesses, home-based enterprises, and those unlikely to incur significant debt.

  
  

Registration

• Registration of a partnership firm is optional, although it is recommended to ensure legal recognition and protection. A registered partnership can enforce legal rights and claims in court, whereas an unregistered one may face limitations.

  
  

Dissolution

• A partnership firm can be dissolved if the number of partners falls below two due to the death, incapacitation, or resignation of a partner.

Professional Assistance:

• To draft a legally sound and current partnership deed, professional assistance is advised. Experts can help ensure that the deed is comprehensive and meets all legal requirements.

These points provide a concise overview of the key aspects of partnership company registration in India.

What is a Partnership Firm?

Fundamental Business Structure

•  A partnership firm is one of the basic and widely used structures for conducting business.

  
  

Collaborative Venture

• It is established when two or more individuals come together to create a business, combining their resources and expertise.

Profit Sharing

• Partners share profits according to a mutually agreed ratio, as outlined in the partnership agreement.

Versatile Application 

• This business structure can be applied across a broad spectrum of trades, occupations, and professions.

Fewer Regulatory Requirements

• Compared to companies, partnership firms have relatively fewer regulatory and compliance obligations, making them easier to manage.

Partnership Firm registration

Ideal for Entrepreneurs

• A partnership firm is a popular choice for its simplicity, flexibility, and the ability to combine resources, skills, and expertise.

Legal Recognition

• Registering your partnership firm is essential for formalizing your partnership and ensuring its legal standing.

Importance of Registering a Partnership Firm 

While registration is not legally required, it provides significant advantages:

Legal Standing

• A registered firm has legal recognition, allowing partners to enforce contractual rights.

Suing Third Parties

•  Registered firms can file lawsuits against third parties, providing legal protection.

Claiming Set-Off

• Registered firms can claim set-off or other legal remedies, unlike unregistered firms.

Who Can Be a Partner in India’s Partnership Firms?

To become a partner in an Indian partnership firm, the following conditions must be met:

Mental and Legal Fitness

•  Must be mentally sound, not underage, insolvent, or legally prohibited from making contracts.

Registered Firms

• A registered partnership firm can partner with other firms or businesses.

HUF Head

• The leader of a Hindu Undivided Family (HUF) can partner if they contribute their own skills and labor.

Companies as Partners

• Legal entities like companies can be partners if their objectives permit it.

Trustees

• Trustees of private, religious, family, or Hindu trusts can partner unless their rules prohibit it.

Advantages AND Disadvantages of a Partnership Firm

Documents and Details Required for the Creation of a Partnership Firm

Obtain Government Licenses/Registration in the Name of a Partnership Firm

Shop and Establishment Act

• Register the firm under the Shop and Establishment Act of the state where the business is located.

• This license is required for any business establishment, including shops, offices, and other commercial premises.

  
  

MSME Registration (important):

• Register the firm as a Micro, Small, or Medium Enterprise (MSME) to avail benefits such as subsidies, loans, and other government schemes.

• This registration can be done through the Udyam Registration portal.

GST Registration

• Obtain a Goods and Services Tax (GST) registration if the firm’s turnover exceeds the prescribed limit or if the firm is involved in interstate trade.

• This is mandatory for collecting GST from customers and claiming input tax credits.

Trade License:

• Obtain a trade license from the local municipal corporation or local authority.

• This license is necessary to operate a business within a specific jurisdiction and ensures that the business complies with local regulations.

Professional Tax Registration

• Register for professional tax if applicable in your state. This tax is imposed on business owners, professionals, and employees.

Import Export Code (IEC) (if applicable)

• Obtain an Import Export Code from the Directorate General of Foreign Trade (DGFT) if the firm is involved in import or export activities.

1. Prepare Required Documents:

   • Partnership Deed (duly signed by all partners).

   • PAN Card of the partnership firm.

   • Address proof of the partnership firm (such as a utility bill, rent agreement, or property ownership document).

   • Identity and address proof of all partners (Aadhaar card, voter ID, passport).

   • photographs of all partners.

   • Firm’s GST registration certificate (if applicable).

   Visit the Chosen Bank

   • Approach the bank where you wish to open the account. It could be any nationalized or private bank.

   Fill Out the Application Form

   • Complete the bank’s application form for opening a current account in the name of the partnership firm.

   Submit Documents

   • Provide the bank with all the required documents, including the partnership deed, firm PAN, partners' ID proofs, and any additional documents requested by the bank.

   Complete KYC Requirements

   • Partners need to fulfill Know Your Customer (KYC) requirements by submitting their identity and address proofs.

   Deposit Initial Amount

   • Deposit the minimum initial amount required to open the account, as per the bank’s policy.

   Account Activation

   • After verification of documents, the bank will process the application and activate the current account in the name of the partnership firm.

Partnership Firm Registration Services

Starting a partnership firm can be an excellent way to manage a business with shared responsibilities. Our Partnership Firm Registration Services simplify the process for you, from drafting the partnership deed to obtaining necessary tax registrations such as PAN and TAN. We help ensure smooth compliance with all legal and regulatory requirements, including partnership registration under the Indian Partnership Act, 1932.

Key Services:

ü  Drafting of Partnership Deed

ü  PAN & TAN Registration

ü  GST Registration and Compliance

ü  Annual Filings and Legal Support