In a Partnership Firm, the Partners collectively own and manage the business and share their responsibilities and liabilities with each other based on the terms and conditions set in a Partnership Deed, Although considered simpler to set up, each partner has ‘unlimited’ liability (Personal property can be used to settle the liabilities of the Partnership).
Partnership Firm - Formation
@ INR 5999/-
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PAN Application
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Drafting of Partnership Deed
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Draft of Other Documents required
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Filing with Registrar of Firms
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Registration Certificate
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Expert Assistance
Documents Required
1. ID Proof of Partners - Voter ID/Passport/Driving License
2. Address Proof of Partners - Bank Statement / Utility bill (not older than 1 month)
3. Registered Office - Property deed (Owned) / Rent Agreement, Utility Bill, NOC from owner
Only 3 steps to follow
Fill the contact form
to get started with registration
Our Expert will connect with you for documents & file the application
Once approved, Firm is formed, will apply for PAN & TAN
Partnership Firm Regisration
A partnership firm is a well-recognized business structure formed with mutual consent of all the partners for a profitable purpose. The firm is managed, owned and controlled by a set of people that are known as partners and have some shared capital in the firm.
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Partnership firms are distinguished as registered and non-registered firms. Partnership firm registration is not mandatory to register but it is advisable to do so. Partnership firm registration offers various benefits that do not apply to the non-registered ones.
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A partnership firm registration is done under the Partnership Act, 1932 with very less documentation and formalities.
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Registration Process
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Select An Appropriate Name For The Firm
Select a name for your firm that is unique and should not have words like emperor, empire, crown, empress or any other words which show sanction or approval of the government.
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File An Application
First of all, the applicant has to file an application in Form 1 of partnership firm registration. An application is filed with Registrar of Firm of the respective state where the firm is located. The application is filled in prescribed format along with specific fees amount.
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Preparation Of Partnership Deed
Partnership deed is prepared with the consent of all the partners on the stamp paper.
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Submission Of The Documents
Submit all the prerequisite documents along with the partnership deed you have prepared.
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Verification Of Documents And Issuance Of Registration Certificate
After submission, documents are closely verified by the authorities. If everything falls under the provisions of act, registration certificate is issued to your firm.
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Pros & Cons of Partnership firm
Pros Of The Partnership Firm
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Simple Business Structure
Partnership firms are one of the easiest business structures that can be started by formulating a partnership deed for which partnership firm registration is necessary. Hence it can be started when the partners are ready and with minimum documentation whereas other forms require at least 10-15 days to cover up all the formalities like obtaining DSC, DPIN, Name approval, etc.
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Ease In Decision Making
It’s easier and faster to make a decision in a partnership firm registration as you don’t have to follow regulations to pass a resolution. A partner can perform transactions on behalf of the firm without any consent of other designated partners.
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Comparatively Economical
In comparison to LLP, a General Partnership is much cheaper to begin. Even in the longer run, it will still work out inexpensive as the compliance requirements are very minimal. For example, there is no need for an auditor. Therefore, Home businesses still opt for this, although it offers unlimited liability.
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Cons Of The Partnership Firm
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Unlimited Liabilities
The liabilities of partners are not limited in the partnership firm that acts as the biggest drawback for the partners. In case of debt or any other misfortune, their personal assets can be used to clear the debts.
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A Maximum Number Of Members
The maximum number of partners in a partnership firm is limited to 20.
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Less Trustworthy For The General Public
A partnership firm is easy to form and can work without partnership firm registration. It can also operate without any strict rules and regulations. These factors make it less trustworthy in the eyes of the general public.
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Abrupt Dissolution
A partnership firm registration can easily be dissolved in case of death or insolvency of any partner. Such conditions hamper the growth of a business.
Documents Required
For Partners (Scan Copy)
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1. PAN Card (Resident of India) or Passport
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2. Voter's ID / Passport / Driving License
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3. Latest Bank statement / Latest Utility Bill
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4, Passport sized Photograph
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5. Specimen Signature
For Registered Office (Scan copy)
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1. Latest Bank statement / Utility Bill
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2. Notarized rental agreement in English
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3. No-objection certificate from the property owner
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4, Sale deed / Property deed (Owned property)
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( It can be a commercial or residential unit)
Note for Partner's documents:
Any one of the partners must self-attest the first three documents. In the case of foreign nationals and NRIs, all the documents must be notarized (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).
FAQs
1. Why should Partnership Firm go for registration?
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Partnership firms are governed by the Indian Partnership Act, 1932. Under the act, registration is not mandatory but it is advisable due to following reasons:
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Partner(s) can’t file a case in any court against the firm / other partners unless firm is registered.
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The unregistered firm or its partners can’t file a case against third party on breach of a contract but the third party can file a Expert'se
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In case of a dispute with a third party, the unregistered firm or any of its partners cannot claim a set off
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2. Why should I set up a partnership firm?
A partnership firm is best for small businesses that plan to remain small. Low costs, ease of setting up and minimal compliance requirements make it a sensible option for such businesses. Registration is optional for General Partnerships. It is governed by Section 4 of the Partnership Act, 1932. For larger businesses, it has lost its relevance with the introduction of the Limited Liability Partnership (LLP). This is because an LLP retains the low costs of a partnership while providing the benefit of unlimited liability, which means that partners are not personally liable for the debts of the business.
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3. How many partners can there be?
A partnership must have at least two partners. A partnership firm in the banking business can have up to 10 partners, while those engaged in any other business can have 20 partners. These partners can divide profits and losses equally or unequally.
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4. What are the main aspects of a partnership deed?
The deed should contain names of the partners and their addresses, the partnership name, the date of commencement of operation of the firm, any capital invested by each partner, the type of partnership and profit-sharing matrix, rules and regulations to be followed for intake of partners or removal.
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5. Is a partnership firm a separate entity?
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The partners in a partnership firm are the owners, and thus, are not a separate entity from the firm. Any legal issues or debt incurred by the firm is the responsibility of its owners, the partners.
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6. Does the Income Tax Act treat Partnership firms and LLPs differently?
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Both general partnerships and LLPs are taxed at flat rate of 30%.
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All the other income tax act provisions apply similarly except that general partnership firms are covered under presumptive taxation scheme i.e if turnover is below Rs. 2 crore in business or Rs. 50 lakh in case of profession, there is no need to maintain books of accounts or get accounts audited whereas, LLPs are explicitly not covered.
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7. Is it mandatory for the partnership firms to file an annual return to the Registrar of firms?
YAccording to the Partnership Act, 1932, there is no such provision of audit. However, if the turnover is more than INR 2 Crore, then it is mandatory to get the books of account audited.
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8. How can you apply for the PAN of the Partnership firm?
You can apply for the partnership firm once the partnership deed is notarized. You can take our assistance in case you need to apply for PAN.
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9. Who are the partners in a Partnership firm?
Any individual, or even a company or an LLP, can become a partner. However, only an individual can become a ‘designated partner’ in an LLP.
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10. Can we convert a partnership firm into a Private Limited company?
Yes, you can convert a Partnership firm into a Private Limited company by filing a prescribed form with the authority.