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 a set of people that are known as partners and have some shared capital in the firm. A partnership firm registration is done under the Partnership Act, 1932 with very less documentation and formalities.
Partnership firms are distinguished as registered and non-registered firms. Partnership firm registration is not mandatory to register but it is advisable to do so. Partnership firm registration offers various benefits that do not apply to the non-registered ones.
How to Register as a Partnership Firm?
The increasing use of technology has also allowed the government entities to make functions like registration and compliance online. In India, although a number of states still follow an offline procedure, there are few states who have adopted the online registration process which requires the application to be filed with the Register of Firms (ROF).
Follow these simple steps to register for a Partnership Firm under the Act.
Step 1: Choose name for a partnership
A firm should select a name that does not resemble the name or color-able imitation of the entity that is already public. Partnership name should not be similar or identical to existing company doing the same business. Applicant can check the validity of his/her chosen name at Ministry of Corporate Affairs website
Step 2: Draft a Partnership Deed
The partnership deed is the most important document for the registration of the company as it provides the registrar with the following necessary information:
- Name and address of company and all partners
- Contact details of partners
- Nature of the business
- Duration of the partnership
- Profit/Loss sharing ratio
- Rules regarding the solvency of the firm
- Information of capital to be contributed by each partner
- Additionally, the Deed also contains information about the remuneration payable to partners in excess of the profit shares, responsibilities of partners, audit procedures, etc.
Step 3: Apply for a PAN Card in the Partnership Name
A firm, irrespective of registration under the Act, has to apply for a Permanent Account Number to the Income Tax Department. This can be applied on the basis of a current account in the name of the firm. The PAN is a requirement to fulfill the obligation of paying taxes.
Step 4: File a Registration Application
The registration application requires a firm to provide information regarding the name of the firm, the nature of the business carried out, address of the business, names and addresses of all the partners, date of commencement of business. This form is further taken to the registrar in the region of the firm’s main office.
Step 5: Submit the Documents
Along with the registration application, the following documents are to be submitted to the Registrar as a part of the registration process:
- Application for registration of partnership (Form 1)
- A certified original copy of partnership deed
- Specimen of Affidavit
- PAN Card in the name of partnership firm
- Proof of address of the partnership firm, ownership deed, lease and rent agreements, etc. are common acceptable documents
- PAN Cards and address proofs of all the partners
- Step 6: Pay the Fees & Stamp duties
- A registration fee and a stamp duty need to be paid at the time of the submission of the documents with the Registrar. The fees vary across states. One must understand that the registration is not complete until all dues are paid.
Step 7: Finalize the Deed
To legalize the Deed, it should be provided to each partner in a written form on a stamp paper. One stamp paper deed should be duly signed by all the partners in front of the notary. The value of the stamp varies from state-to-state. The signed copy is thereafter submitted to the Registrar during the registration process.
Step 8: Certification from the Registrar
The registrar, after thorough examination of the documents, will issue a registration certificate.
The firm will be thus on record in the Register of Firms . On the date of this entry, the firm shall be deemed to be registered. The partnership firm is required to add ‘(Registered)’ after its name from the date of registration.
A lot of states in India now provide the facility of registering partnership firms online. The online registration of partnership firm requires the firm to file an application online. The firm will have to furnish the same information on this form. The acknowledgement number raised after the submission of the application is further used to login on the website and the firm has to upload the scanned copies of all the above mentioned documents. The registrar will review the documents and the certificate will be sent through an email.
