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Partnership Firm Registration

What is Partnership Firm?

To carry on a business if any Persons who have entered into partnership with one another are called “Partners“; conjointly called as a “Partnership Firm”; and the name under which their business is carried on is called the “ Partnership Firm Name”

Brief Definition of a Partnership Firm

Any individual’s/companies/firms/trustees at least two of which are necessary to constitute a partnership Firm. 

Indian Partnership Act 1932 – It does not contain anything about the maximum number of partners in Partnership firm. However the Companies Act 2013 mentioned that the limit of maximum number of partners for any business is limited to the extent of only 100 Persons.

Hence, limits specified under companies Act should be regarded as the maximum limits to the number of partners in a partnership firm. Further there are certain advantages and disadvantages also they are in a partnership firm.

Advantages of Partnership Firm

1. Less Legal Obligations and Compliances

2. Minimum external regulations leads to better decision making

3. Easy Access to the Profit arising out of the Firm

4. More Partners means more capital

 Disadvantages of Partnership Firm

1. Losses are unlimited and partners will personally liable for the losses

2. Not a Separate Legal entity

3. Limited to access capital ( Only from Partners)

4. Less Tax Relaxation

Process of Registering Partnership Firm

The Constitution of a partnership firm is easy as compared to the other forms of business organisations. The partnership firm can be constituted by drafting the partnership deed and entering into the partnership agreement. Only partnership deed and no other documents are required to constitute Partnership Firm. It need not mandatory be registered with the Registrar of Firms. A partnership firm can be incorporated and registered at a later date voluntarily.

Documents Required

1. KYC of Proposed Partners. 2. Proposed name of the Firm. 3. Nature and objectives of the business. 4. Principle Place of business/ Registered Office. 5. Date of commencement of business. 6. Amount of Capital Contributed by each partner. 7. Profit and Loss sharing ratio among the Partners. 8. Other Specific conditions as may be mutually agreed by the partners.

Registration of Partnership Firm

After entering in to the agreement by the Partners they can voluntarily register their firm with registrar of Firms of the state and an application form is required to be filed to the Registrar of Firms of the State/Area in which the firm is situated along with fees as may be prescribed. 

The application for registration has to be signed and verified by all the partners. 

The application of Registration can be sent to the Registrar of Firms through post or by physical delivery, which contains the following details:

1. The name of the firm.

2. The principal place of business of the firm. (If Premises is rented than rent agreement )

3. The location of any other places where the firm carries on business.(if any)

4. The date of becoming a partner

5. The names and permanent residential addresses of all the partners.

6. The duration of the firm from the date of constitution.

Note: Above Registration can be done even after commencement of business it is not mandatory but voluntarily registration of firm is treated as good practice in legal and Finance world. It is even helpful for avail any credit facility from banks and any financial institutions.

Register your partnership firm today. Enter your details below.

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FAQ's

How much time does it take to register a Partnership Firm?

The registration of a Partnership Firm in our country can take up to 10 to 12 working days. However, it may vary from state to state subject to government processing time which varies for each state.

It is necessary to register Partnership Firm?

Not Necessarily but unless and until a partnership firm is registered with the registrar of

firms of state, the rights of the partners inter se or against strangers cannot be enforceable in a court of law.

 Is a partnership deed necessary to form a Partnership Firm?

No, it is not necessary. But it is often cautious to make a partnership deed to produce to the bank or FIs, income tax authorities and to clients with whom the partnership firm deals.

Can Partnership firm be sued in the name of the firm?

Any person can sue a partnership firm but the plaintiff has to disclose the name of all the partners who constitute the firm.

Can anyone deal with one of the partner of Partnership Firm?

Yes. The law presumes that each partner is an agent on behalf of other partners of the Firm and dealing in good faith with one partner binds the other partners as well. There are certain exceptions to this rule which we will discuss below.

What are the acts in which consent of all partners is necessary?

Any suit for arbitration, transfer/sale of immovable property, acquisition/purchase of immovable property, withdrawal of any suits and entering into a contract with anyone can only be done by the consent of all partners.

Scope of liability of Partnership Firm?

The firm and all the partners are liable for the any wrongful act or fraud undertaken by any of the partner which causes loss to the third party.

Should retiring partner required to give notice of his retirement?

Every retiring partner need to give public notice of his retirement to the registrar of firm. If he has failed to do so then he shall be liable for act of the firm.