In just one working day, launch a partnership business in India. We offer nationwide consulting and assistance. We help with the PAN, TAN, and GST registration of the company as well as the drafting of the partnership deed. Speak with our startup consultants for a smooth and rapid launch for your business.
Overview of Partnership Firm Process in India
| Government Fee | There are two parts to the government cost for forming a partnership firm in India. The partnership deed or agreement must first pay the Stamp Duty, and then the Registrar of Firms must collect a fee. States differ in these expenses. |
| Timeline | The firm can be functional in 1-2 working days. |
| Eligibility | Partners: 2 to 20. (Max ten in banking business) A Registered Address Unique Name Adequate Capital (No Min or Max Limit) Only Indian citizens are eligible to start a partnership firm. NRI/PIO can be partners on a non-repatriation basis. |
| Stepwise Process | Steps to establish a partnership firm: Draft an agreement of partnership/Deed Pay the appropriate stamp duty on the deed. Notary attestation is recommended. Registration of the firm is optional (recommended) Apply for PAN and TAN. Apply for GST registration if needed. Obtain the MSME registration for the firm. Protect the brand or trademark. If planning for export and import, apply for IEC. |
| Documents Required | Documents Required to Setup Partnership Passport size colour photo PAN Card (Mandatory) Identity Proof of Partners Proof of Residence of Partners Proof of Registered Office Address NOC from the owner of registered office premises |
Get Started with Partnership Firm Establishment
An organization created and governed by the Indian Partnership Act of 1932 is known as a partnership firm. According to the Act, a “Partnership” is a relationship in which two or more people have decided to split the company’s debts and earnings. These people are referred to as “partners,” and the company they run in “partnership” with one another is known as a partnership firm. A Registered Partnership Deed serves as the foundation for the establishment of a partnership firm. All of the terms and conditions that the partners have mutually agreed upon are stated in this written document.
Key Features of a Partnership Firm:
- Shared Profit & Capital
- Unrestricted Liability
- Optional Registration
- Flexible Management
- Limited Existence
Checklist & Documents
In order to form a Partnership Firm, you must fulfil certain prerequisites. These consist of the firm’s name, registration office, and number of partners. The table that follows outlines the prerequisites for establishing a partnership firm and the paperwork needed to register one in India. For a partnership firm to be established, incorporated, and run smoothly, the partners must meet both of these conditions.
Minimum Requirements
- At Least 2 Partners
- Maximum 20 Partners
- A Unique and Valid Name of the Firm
- A Registered Office in the State
- Partnership Deed
List of Documents
- Documents of Partners
- PAN Cards
- Aadhar Cards
- Coloured Photographs
- ID Proofs
- Address Proofs
- Documents of Registered Office
- Proof of Address
- NOC from the Property Owner
- Rent Agreement/Property Tax Receipt
- Legal Documents
- Partnership Deed
Process of Partnership Registration with ROF in India
In India, a partnership firm must be registered by submitting an application in the required format to the Registrar of Firms (ROF). Applications can be viewed, completed, and submitted online at the Registrar of Firms (ROF) website in cases where the mode is online. In cases where the mode is offline, the applicant must apply in person at the state’s ROF office. To finish the Partnership Firm Registration procedure, the applicant must follow these steps regardless of the application method.
Step-1: Documentation for Partnership Registration
In India, preparing the required paperwork is the first step in the partnership registration procedure. All partners must provide their primary KYC documents, including their Aadhar, PAN, evidence of residential address, and a colour photo. Any utility bill for the building and the owner’s NOC are needed as proof of the Principal Place of Business.
Step-2: Select a Name of the Firm
Your partnership firm’s name needs to be distinctive and expressive of its brand and line of work. Furthermore, it shouldn’t be the same or very similar to a registered brand or the name of an already-existing company. You can utilize the name search function on the MCA and IP India websites to see if the chosen name is available.
Step-3 : Partnership Deed Registration
In India, the legal foundation for forming a partnership firm is the partnership deed. Only when the proper stamp duty is paid in accordance with the state stamp laws is the deed deemed legitimate and lawful. The Partnership Deed must be signed by each partner in front of the notary and two additional witnesses.
Step-4 : PAN and TAN of the Partnership Firm
Form 49A is used to apply for the firm’s PAN, which is an essential identification number for income tax compliance. For TDS compliance, which is essential for any organization, TAN is just as significant. The TAN application is submitted on Form 49B. An important stage in the registration procedure is when the government gives the company its PAN and TAN.
Step-5 : GST Registration for Partnership Firm
Partnership firms must register for GST in order to meet GST-related compliance obligations, including filing GST returns and paying taxes. To do this, a suitable application for GST registration is submitted to the GSTN together with the necessary paperwork. The Department assigned the company a unique GSTIN following the approval of the GST registration. You can use this GSTIN for any future GST-related activity.
Step-6 : Partnership Firm Registration with the ROF
You must first examine the application process in your state before registering a partnership firm in India. If your state permits partnership firms to be registered online, you can apply by going to the official ROF website and providing the required paperwork and paying the required costs. To apply for partnership firm registration, you must go to the Registrar of Firms’ (ROF) office if the application process is offline. The ROF will register your company and issue a Partnership Firm Registration Certificate in its name once the application has been approved.
Benefits of Partnership Registration
In India, partnership firms are not required to register, however Section 69 of the Partnership Act outlines a number of negative outcomes. The fact that an unregistered partnership organization cannot file a lawsuit to collect more than ₹100 from a debtor is one of its biggest drawbacks. Every partnership firm is required to register with the Registrar of Firms for this reason. The partnership agreement’s notary attestation or registration before the registrar of documents and deeds under the Registration Act does not, in and of itself, constitute company registration. Thus, exercise caution when establishing the business. Our knowledgeable consultants are prepared to assist you in establishing your business relationship in India.
A registered firm has the following advantages.
- Legal Recognition & Protection
- Easier Dispute Resolution
- Right to Sue & Be Sued
- Enhanced Credibility
- Easier Conversion to Other Business Structures
Partnership Firm vs Company
The following table contrasts the structure of a partnership firm with that of a private limited company, which is one of the most common options for entrepreneurs. We have tried to assist you in selecting the best business structure for your needs, suitability, and available resources by contrasting the benefits and drawbacks of a partnership firm with those of a company.
| Partnership Firm | Private Limited Company |
| Merits (Pros) Easy to Step Up Incorporation is an Option Flexible Management Low Cost of Operations Shared Liabilities Between Partners Limited Control by External Authorities Easy to Dissolve Privacy in Firm’s Affairs Demerits (Cons) Unrestricted Liability Limited Investment Potential Limited Period of Existence No Separate Management Authority | Merits (Pros) Limited Liability High Investment Potential Perpetual Existence Lesser Compliances Separate Management Structure Demerits (Cons) Exhaustive Incorporation Process High Cost of Operations High Number of Compliances Long & Costly Winding Up Process Lack of Privacy Complex Decision-Making Process High Taxation Greater Social Responsibility Several External Regulations |
Frequently Asked Questions
Q1. What are the different types of Partnership Firms?
Partnership firms can be classified as either registered or unregistered under the Indian Partnership Act of 1932. A partnership deed is the only basis for establishing an unregistered firm. Registered firms, on the other hand, are also registered with the Registrar of Firms (ROF).
Q2.What are the essential details mentioned in a partnership deed?
The law does not provide any specific format for a partnership deed. The deed can be drafted in any manner and contains details mutually agreed upon between partners. These details include:
- The main object and activities of the Firm.
- The effective date of formation of the Firm.
- The duration of the Firm.
- Capital sharing ratio between partners.
- Profit sharing ratio between partners
- Management and Administration of Partnership Firm
- The manner of resolving disputes
Q3. Can I convert a Partnership Firm into a Private Limited Company or LLP?
Yes, a partnership firm can be converted easily into a Limited Liability Partnership or a Private Limited Company, the manner for which has been prescribed in the Partnership Act 1932.
Q4. Do I have to file the annual return of the Partnership Firm?
A partnership firm is exempt from filing annual returns, in contrast to a Limited Company or LLP. Even if a company did not conduct any business during the preceding fiscal year, it is nevertheless required to file an income tax return.
Q5. Is filing ITR returns and tax audits mandatory for Partnership firms?
At the conclusion of each fiscal year, partnership firms are required to file Income Tax Returns (ITR). The ITR needs to be submitted by July 31st at the latest. Companies are under no need to perform yearly tax audits. Nonetheless, a tax audit is necessary when a company’s turnover in a given fiscal year exceeds Rs. 1 crore or Rs. 50 lakhs for professional services.
Q6. Who makes the managerial decisions in the partnership firm?
In a partnership firm, ownership and management are one and the same, so the partners bear a great deal of joint responsibility for the business. Every partner in the firm will be bound by the decision of one partner.
