Partnership Firm

A Partnership Firm is nothing but an organization of two or more people having a mutual understanding to run business and earn profit. Partnership firms are governed by the Indian Partnership Act, 1932 in India. Individuals are known are partners and collectively as a partnership firms.

How to Register a Partnership Firm?

It is easy to form a partnership firm in India. As the firm is not required to get registered the business can be started at any time without doing any legal formalities. On the other hand, if someone wants to create a partnership firm. Then an application can be filed under Section 58 of the Indian Partnership Act, 1932. The application is to be filed with the jurisdictional Registrar of Firm. The Registrar of Firm after being satisfied will issue a certificate of registration to the firm.

Benefits of Registration

  1. Easy Formation
  2. Eligible to register under Startup India Initiative of Govt of India (only registered Partnership firms are eligible)
  3. Larger Resources
  4. Flexibility in operation
  5. Better Management
  6. Sharing of Risk

Documents Required

    For Partners
  1. Photograph of all the Partners
  2. ID & Address Proof of all the Partners
  3. Partnership Deed
  4. An application in prescribed format

    Proofs for office address
  1. Notarized rental agreement in English

What other registrations are required along with Firm registration?

This depends on the nature of business. But broadly you will require below registrations along with Firm registration

  1. GST Registration
  2. PF Registration if number of employees more than 20
  3. Professional Tax of respective states
  4. Local body licenses (Eg. Karnataka Shops & Establishments)
  5. Complaince with Labour laws like Factories act, ESI, POSH, Labour welfare Fund etc..

Frequently Asked Questions

Not necessarily. However, unless a partnership firm is registered with the registrar of firms and societies, the rights of the partners inter se or against strangers cannot be enforced in a court of law. If the partnership deed itself creates, transfers or affects an interest in immovable property.

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

Yes. A person may become a partner with another for a single adventure or undertaking.

Yes. If the number of partners is more than 20, it has to be registered as a company.

A person may sue a partnership firm but the plaint has to disclose the name of all the partners who constitute the firm. However under the Income Tax Act, a firm can be assessed to tax independently of its partners. A partnership firm therefore enjoys a quasi independent status.

Yes. The law presumes that each partner is an agent of the other and dealing in good faith with one partner binds the other partners as well. There are certain exceptions to this rule, which is answered in the next question.

Submitting a suit for arbitration, transfer of immovable property, acquisition of immovable property, withdrawal of suits is all forbidden except by the consent of all partners or by the usage of custom to the contrary.

Yes. The firm and all the partners are liable for the wrongful act or fraud which causes loss or injury to any third parties.

Every partner will be liable for the acts of the firm even if he has retired, if he has failed to give public notice of his retirement. Such notice should be given to the registrar of firms an by announcements in the local official gazette.