Overview

Starting a business with a partner is a great way to combine ideas, resources, and skills. In India, many entrepreneurs prefer to form a partnership firm because it is simple, flexible, and easy to start. While the requirement of registration of a partnership firm is not a mandatory process under the Indian Partnership Act, 1932, it is always better to register the firm for legal protection and better credibility.

Why

Registering your partnership firm provides several benefits:

• Legal recognition: A registered firm can sue or be sued in its name. An unregistered firm cannot enforce its rights in the court of law.
• Enhanced credibility: Registration adds trustworthiness to your business in the eyes of clients, banks, and vendors.
• Easy dispute resolution: Registered partnership firms can settle disputes legally among partners or with third parties.
• Access to funding: Banks and the financial institutions prefer to lend to registered firms.
• Simple compliance: Partnership firms have fewer compliance requirements compared to companies.

Process

Here’s a step-by-step guide for the Partnership Firm Registration process in India:

1. Choose a unique firm name

The name of the firm should not be identical or alike to an existing registered firm or trademark, and it should not contain words like “Emperor”, “Crown”, or anything which suggesting government patronage.

2. Prepare the partnership deed 

A partnership deed is the most important document of the firm. It mentions the rights, duties, profit-sharing ratio, capital contribution, and other terms agreed upon by the partners.

3. Get the partnership deed notarized

The deed should be printed on the stamp paper of appropriate value (depends on the state) and signed by all partners. Then, it must be notarized by a notary public.

4. Apply to the Registrar of Firms

Fill out Form 1 (Application for Registration) and submit it along with the partnership deed and necessary documents to the Registrar of Firms of the state where the business’s principal office is located. (As per Section 58 of the Indian Partnership Act, 1932.)

5. Pay the prescribed fees

The registration fees must be paid along with the appropriate application.

6. Certificate of Registration

After verification of documents, the Registrar will issue the Certificate of Registration. The firm’s details will be entered into the Register of Firms.

Documents

You need to submit the following documents for partnership firm registration:

• Duly filled Form 1 (Application for Registration).
• Original notarized partnership deed.
•  Affidavit declaring the intention to start the firm.
• Address proof of the firm (rent agreement, electricity bill, or property papers).
• ID and address proofs of all partners (Aadhaar card, PAN card, passport, driving license).
• Passport-size photographs of partners.
• 7. NOC (non-objection certificate) from the landlord if the office is on rented premises.

Fee

The fees for registering a partnership firm vary from state to state, including government fees, stamp duty, and professional charges if you hire a consultant. In some states, the stamp duty depends on the capital contribution or investment mentioned in the partnership deed. Additional charges may apply for obtaining PAN, TAN, and GST registration if required.

Timeline

Generally, it takes 15 to 20 working days to register a partnership firm in India, something time can vary as it also depends on state to state registration process.

FAQs