How to obtain a Partnership Firm Registration in India?

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Partnership firm registration in India is done as per the Indian Partnership Act, 1932. Partnership firms are incorporated by the registrar of the company of the respective state. You need to prepare a partnership deed between the partners to determine the responsibilities of each partner.
This article covers all the characteristics of Partnership firm Registration in India


What are the details compulsory for a Partnership Deed?
Though there is no precise format for drafting a partnership deed, a common deed comprises the following details:

·         Name of all the partners;

·         Address Proof of all the partners;

·         Date of origination of business;

·         Duration of firm’s existence;

·         Capital to be contributed by each partner;

·         Profit and loss sharing ratio;

·         Earnings of the partners;

·         Duties and responsibilities of the partners;

·         The process to be followed in case of retirement, death of any partner or dissolution of the company.


·         Other mutually decided clauses.

What is Partnership Firm?

Indian Partnership Act of 1932 defines partnership as the relation between a person who has agreed to share profit and loss of a business carried on by them. The partners share their profits and losses in the proportion of their respective owners.
The sum of money contributed by each partner can provide the total capital required. The decision-making method in a partnership firm is a corporate business. Every partner should be on the same side before taking any decision. Without a partnership firm incorporation, two partners cannot start their business venture. 

What are the advantages of Partnership Firm registration in India?

  •     Easy business structure

A partnership firm in India can be formed effortlessly because the only thing you need is partnership deed to get yourself registered. It takes around 10-15 days to cover all the formalities.

  •     Easy decision making

It is easier to make decisions in a partnership firm as there are no regulations to pass a resolution.
  •     Fundraising is easy

Funds can be easily raised because a partnership firm has multiple partners, and they are capable of raising more contributions. Bank also consider partnership firm for sanctioning loans.

  •     Easy management

In the Partnership deed, it has been mentioned the work and responsibility assigned to each partner according to their capability.

What are the disadvantages of a Partnership Firm Registration in India?

  •      Unlimited liability

The liability of partners is not limited to the partnership firm; in the case of debt partners, personal assets can be used.
  •      Fixed numbers of members

The maximum number of members is set to 20.
  •      Less trustworthy for the general public

A partnership firm can work without partnership firm registration. It also operates without any strict rules and regulations, which makes it less reliable.
  •     Abrupt dissolution

It can easily dissolve in case of death or insolvency of a partner, and this hampers the business growth.

What are the documents compulsory for Partnership Firm Registration?

The documents needed for partnership firm registration are-

  •      Partnership deed    

It is a type of agreement formed between the partners which describes the rules, duties, and functions. It helps to avoid conflicts between the partner. A partnership deed is created and signed by all the members on a judicial stamp which costs around Rs. 2000.
  •      PAN

For the identity proof, every partner has to submit their PAN.
  •      Address proof

The partners have to submit their address proof which can be their Aadhar card or PAN.
  •      Office address proof

Address proof of the working place is to be submitted. If the property is rented, then the rent agreement along with electricity or water bill and NOC has to be provided.

How to get a partnership firm registered in India?

  •      Select an Appropriate Name for the Firm

The name should be unique, and it should not consist of words that show government approval
  •      File an Application

An application is to be filed with the respective registrar of firm in the proper format with the prescribed fees
  •      Prepare Partnership Deed

Partnership deed consists of the following-
§  Details of partners and the firm
§  Nature of the business
§  Capital contribution
§  Shares of the partners
§  Profit and loss sharing ratio
§  Rights and duties of  partners
§  Loans provided by the partners
§  Any other clause made with mutual consent between partners

  •      Documents Submission

All the required documents along with the partnership deed are to be submitted
  •     Issuance of Certificate

All the required documents provided are verified by the authority, and if everything is correct, the certificate of registration is granted.


What is the need for partnership firm registration?

If you don’t register your partnership firm then:


  •          Partner of Unregistered Firm Cannot Sue any Firm enforcing any right under Indian Partnership Act, 1932
  •         Cannot Claim Setoff with Third Party
  •         The Firm cannot Third Party but Third Party can be able to Sue Irrespective of the Registration

What is the tax compliance of a registered Partnership Firm?

Ø  Once the incorporation process of the firm is completed, the partnership firm must acquire Permanent Account Number (PAN) and (TAN) Tax Deduction Account Number from the Department of Income Tax.
Ø  A Partnership firm requires to file ITR irrespective of the revenue or loss. For the partnership firm registration, the amount of income tax on the whole of the total income will be 30% surcharge on the tax.
Ø  The Partnership Firm having a yearly turnover more than INR 100 lakhs are necessary to acquire a tax audit.
Ø  GST registration is obligatory for businesses whose annual revenue exceeds INR 40 lakhs (INR 20 lakhs for North Eastern states). For some companies like Import-Export, E-commerce, and Market Place businessman, GST registration is obligatory.
Ø  After GST registration companies have to file monthly, quarterly and annual GST return.
Ø  Partnership firms are also compulsory to file quarterly TDS returns that have TAN and are mandatory to deduct tax as per TDS rules and regulations.
Ø  For all the partnership firms having ESI registration, they must file for ESI return.

What are the documents obligatory for Annual Compliance of a Partnership Firm Registration?

Ø  Statement of sales and purchase during a financial year.
Ø  Statement of expenditures made during a fiscal year.
Ø  Bank statements of the bank account of the partners.
Ø  Copy of TDS returns filed.
Ø  Copy of GST returns filed.


Conclusion

The Partnership act supervises the registration, formation and governance of the partnership firm.  Partnership firms are easy to set up and easily manageable. Therefore, business partnerships are beneficial for you if you are willing to starting a new business. To get your Partnership Firm Registration in India, contact Corpbiz.


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