Partnership Firm Registration
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- PAN Registration
- TAN Registration
- Partnership Deed Preparation
- Free Consultation
Process of Partnership Firm Registration
A partnership firm is a business entity formed when two or more people agree to share the profits of a business carried on by all or any of them acting for all. It is regulated by the Indian Partnership Act, 1932. Here’s an overview of the process, benefits, and requirements for registering a partnership firm in India.
Although the Indian Partnership Act, 1932, does not mandate the registration of partnership firms, registering the firm provides certain legal benefits:
- Legal Rights: Registered firms can sue other partners or the firm itself to enforce rights. Unregistered firms do not have this privilege.
- Third-party Lawsuits: Registered firms can initiate lawsuits against third parties, whereas unregistered firms cannot.
- Set-off Rights: Registered firms can claim set-offs in legal proceedings, which is not available to unregistered firms.
To register a partnership firm, the following documents need to be submitted to the Registrar of Firms:
- Application for Registration (Form 1).
- Certified copy of the Partnership Deed.
- Affidavit attesting to the correctness of the details in the partnership deed and documents.
- Address Proof and PAN Card of the partners.
- Proof of Principal Place of Business (ownership documents or rental/lease agreement).
Upon satisfactory verification of these documents, the Registrar will register the firm in the Register of Firms and issue a Registration Certificate.
Partnership Deed
A partnership deed is a written agreement between the partners detailing their rights, responsibilities, profit-sharing ratio, and other obligations. It is advisable to have a written partnership deed to avoid future disputes.
Details Required in a Partnership Deed
General Details:
- Name and location of the firm and all partners.
- Nature of business.
- Date of commencement of business.
- Capital contribution by each partner.
- Profit/loss sharing ratio.
Specific Details:
- Interest on capital, partner drawings, and loans provided by partners.
- Salaries, commissions, and other compensations to partners.
- Rights and duties of each partner, especially active partners.
- Procedures for the retirement, death, or dissolution of the firm.
- Any other mutually agreed terms.
Timelines for Registration
The registration process typically takes about ten days, depending on the approval and response time from the respective department.
Checklist for Partnership Firm Registration
- Drafting of the Partnership Deed.
- Minimum of two partners and a maximum of one hundred partners.
- Selection of an appropriate firm name.
- Identification of the principal place of business.
- Bank account details and PAN card of the firm.
FAQs on Partnership Firm Registration
The time required to register a partnership firm varies by state in India. Generally, it takes about 12 to 14 working days. However, the exact time may differ depending on the specific requirements and processing times of the state’s registration authority.
A partnership may be considered invalid if the partnership agreement is not registered. Additionally, if the business’s purpose is illegal, the court may declare the partnership invalid and order its dissolution.
Yes, partners can dissolve the partnership if they wish to do so. If it is a partnership at will, it can be dissolved by giving notice. Alternatively, the partnership can be dissolved according to the terms specified in the Partnership Deed or by entering into a separate dissolution agreement.
A partnership’s certificate of incorporation can be cancelled under certain circumstances, commonly referred to as dissolution. This can occur if all partners except one are declared insolvent, or if the firm engages in illegal activities such as selling prohibited drugs, corporate malpractice, or business dealings that threaten India’s interests.
In a partnership, every partner is jointly and severally liable for all acts and activities of the firm while they are a partner. This means that all partners are collectively and individually responsible for any third-party loss or harm resulting from the business’s activities, even if the damage or loss was caused by just one partner.
