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Partnership Firm Registration:
Our dedicated team will help you to register your partnership firm across India. We will extend our support in Documentation, Preparation, filing and subsequent Follow-up with the registrar of firms.
Partnership Firm Registration:
Partnership Deed is a prima-facie instrument for Registration. Different states impose different stamp duty on the partnership agreements/deeds, it means while creating a partnership instrument (Deed) the partners must purchase stamp paper of appropriate value as may be applicable in the respective state, to be annexed with the agreement.
Though registration of partnership Firm is not mandatory under The Partnership Act, 1932, however, section 69 of the act specifies the effect of Non-Registration, according to that an unregistered firm shall not be able to recover any sum more than Rs. 100.
Hence, it is strongly recommended to register the partnership firm with the registrar of firms (ROF).
Requirement to Start a Partnership Firm:
Minimum Two Person:
Two person is needed to become partners of the firm. However, maximum 20 partners are allowed in a firm (10 in banking business)
No FDI is Allowed:
Foreign investment in a partnership firm is not permitted. In the firm, only Indian citizens can become the partner and start the partnership firm.
No Minimum Capital:
No minimum capital is prescribed, it must be based on the business requirements. The Stamp Duty on the deed is based on the capital of the firm.
Name of the firm should be unique, and it must not same or similar to the name of any existing trademark which is registered or applied.
List of Documents for Partnership Registration:
Two Photograph of Each Partners
PAN Card copy of Partners
Proof of Registered Office:
Utility Bill as Proof of Registered Address
NOC From the owner of the premises
Partnership Registration Process:
1.SELECTION OF NAME:
The name of the partnership firm should be cross-checked with the trademark registry to avoid any infringement of someone else Trademark or brand name.
Deed of Partnership is the constitution of the firm which determines the relationship of partners among themselves as well as the relation of partners with the firm.
The Partnership Deed must be well drafted, and the signature of the partners be made on the agreement in the presence of witnesses before a Notary or a Chartered Accountant.
The signed partnership agreement along with the KYC of partners and premises proof is filed with the concerned Registrar of Firms, for its registration.
Frequently Asked Questions:
A Partnership is the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
What is a partner, and what is firm and firm name?
Persons who have entered into partnership with one another are called individually partners and collectively a firm and the name under which their business is carried on is called the firm name.
Is it compulsory to register partnership firm?
Not necessarily. However, unless a partnership firm is registered with the registrar of firms and societies,
a) It will not be possible to sue one partner against another partner or against the firm and vice versa in the court of law to claim right.
b) Partnership firm cannot sue third party in the court of law for enforcement of it’s right
Is there a limit on the number of partners in a partnership firm?
Yes. There must be minimum of 2 persons to form a partnership firm. If the firm is intended for financial transactions maximum of 10 and for other purposes maximum of 20 persons can form a firm.If the number of partners is more than 20, it has to be registered as a company.
How do you value a partnership where one partner retires?
This should have been stated in the original partnership agreement but the valuation will be a combination of goodwill, premises value, fixtures and fittings and all other assets minus all liabilities except the partner’s capital. The best advice is to use the services of a competent professional.
Can a partner be expelled from the partnership? If so, under what circumstances and to what effect?
A partner may not be expelled from a firm by any majority of the partners, save in the exercise in good faith of powers conferred by contract between the partners. The provisions of sub-sections (2), (3) and (4) of section 32 of the Indian Partnership Act, 1932 shall apply to an expelled partner as if he were a retired partner.
How a new partner or partners can be introduced in a firm?
Subject to contract between the partners and to the provisions of section 30 of the Indian Partnership Act, 1932, no person shall be introduced as a partner into a firm without the consent of all the existing partners. Subject to the provisions of section 30 of the Indian Partnership Act, 1932, a person who is introduced as a partner into a firm does not thereby become liable for any act of the firm done before he became a partner.
Can a minor be admitted as a partner?
A minors can be admitted to the benefits of partnership with the consent of all the partners for the time being.
The Minor (who is admitted to benefit of partnership) has a right to such share of the property and of the profits of the firm as may be agreed upon and he may have access to and inspect and copy any of the accounts of the firm. Such minor´s share is liable for the acts of the firm, but the minor is not personally liable for any such act.
What is the disadvantage of partnership?
The major disadvantage of partnership is the unlimited liability of partners for the debts and liabilities of the firm. Any partner can bind the firm and the firm is liable for all liabilities incurred by the firm or any partner on behalf of the firm. If property of partnership firm is insufficient to meet liabilities, personal property of any partner can be attached to pay the debts of the firm.
Is Partnership Firm is a legal entity?
A Partnership Firm is not a legal entity. It has limited identity for purpose of tax law. As per section 4 of Indian Partnership Act, 1932, ‘partnership’ is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all. Under partnership law, a partnership firm is not a legal entity, but only consists of individual partners for the time being. It is not a distinct legal entity apart from the partners constituting it.
What is a partnership at will?
When the partnership deed does not contain any provision for the duration of the partnership nor conditions for the termination of partnership, it is a partnership at will.
Does the death of a partner dissolve the partnership firm?
Yes. The death of a partner automatically dissolves the partnership firm. It is however usual for the partnership deed to provide before hand that the firm should continue in spite of death, retirement or insolvency of a partner.
Is the firm liable for the wrongful act of one partner?
Yes. The firm and all the partners are liable for the wrongful act or fraud which causes loss or injury to any third parties.
Registration of Partnership Firm
Registration of Partnership firm under Indian Partnership Act, 1932
All the District Registrars are Registrars of firms under the Indian Partnership Act, 1932. Registration of firms can be done with the District Registrars concerned. In the application for registration, the signature of each partner shall be attested by an Advocate or Chartered Accountant.
The name of the firm shall not be objectionable.
A firm can be registered by filing a statement in Form-I. Any change in the constitution of the firm should also be filed under this Act. The Registrar files the statement after making necessary entries in the Register of Firms.
Taxation of Partnerships
Partnership firm is subjected to taxation under the Income Tax Act,1961. Under the Income Tax Act, the Partnership firm is taxed as a separate entity, distinct from the partners. In the Act, there is no distinction between assessment of a registered and unregistered firms. However, the partnership must be evidenced by a partnership deed.
The partnership deed is a blue print of the rights and liabilities of partners as to their capital, profit sharing ratio, drawings, interest on capital, commission, salary, etc, terms and conditions as to working, functioning and dissolution of the partnership business.
Under the Act, a partnership firm may be assessed either as a partnership firm or as an association of persons(AOP). If the firm satisfies the following conditions, it will be assessed as a partnership firm, otherwise it will be assessed as an AOP:-
The firm is evidenced by an instrument i.e. there is a written partnership deed.
The individual shares of the partners are very clearly specified in the deed.
A certified copy of partnership deed must accompany the return of income of the firm of the previous year in which the partnership was formed.
If during a previous year, a change takes place in the constitution of the firm or in the profit sharing ratio of the partners, a certified copy of the revised partnership deed shall be submitted along with the return of income of the previous years in question.
There should not be any failure on the part of the firm while attending to notices given by the Income Tax Officer for completion of the assessment of the firm.
It is more beneficial to be assessed as a partnership firm than as an AOP, since a partnership firm can claim the following additional deductions which the AOP cannot claim :-
Interest paid to partners, provided such interest is authorised by the partnership deed.
Any salary, bonus, commission, or remuneration (by whatever name called) to a partner will be allowed as a deduction if it is paid to a working partner who is an individual. The remuneration paid to such a partner must be authorised by the partnership deed and the amount of remuneration must not exceed the given limits.
Apart from registration of a business there are various other registrations which are mandatory in nature or desirable for smooth functioning of the business some of these are as under Mandatory Registration Applicable to all Businesses in India
Permanent Account Number (PAN):
Income tax department allots an account number to all those persons who are required to pay tax or to file a tax return or annual information report (AIR). This number is permanent in nature and need to be quoted on all the tax returns, tax payments challans, any correspondence with the income tax department. This number is an alphanumeric number of 10 digits which is allotted only once to a person.
TDS Number (TAN):
While making payments to suppliers, vendors, service providers, employees the tax needs to be deducted at source which is also known as TDS. Tan no. is a permanent identification number, allotted to those persons who are liable to deduct tax at source. Applicable to all Businesses in India
Shops and Establishment Registration:
Every shop and establishment needs to register itself compulsorily under this Act within 30 days of commencement of work. As this is such a basic license, many other licenses require this as proof of a commercial business. For example, most banks will require you to furnish it if you want to open a current account. To get this license, you would need to provide the PAN card of the business owner or the business itself, a copy of the rental agreement or sale deed, and details of all the employees. Premises governed by the Act are shops, commercial establishments, residential hotels, clubs, restaurants, eating houses, theaters and other places of public amusement or entertainment etc. except those who falls under Factories Act 194
Professional Tax Registration:
It is a tax on profession in India and is levied by State Governments on every professionals or employees of a private sector.
Import Export Code :
A person which wish to deal in international trade by way of import or export need to register with the director general of foreign trade and obtain IE Code.
A person may not be able to supply goods or services all over India unless GST Registration is obtained, However for same state supply the limit is 40 Lac
Udyog Aadhar enables an entrepreneur to seek online services offered by Government Departments apart from various other benefits under MSME.
Food License / FSSAI Registration:
If you are engaged in a business of manufacturing, trading, storing or dealing in any manner of food items, then the state level FSSAI registration or Central License is mandatory based on the turnover.
Wholesale or Retail Drug License is location-based and is granted by the State Government based on fulfilling certain norms and criteria. No entity can start or continue sale/trade of Drugs without drug license.
Private Security Agency License: Private Security Agency is a lucrative business with immense potential, however, it can be started or continued only after obtaining a license from the competent authority as designated by the state government.
Other registrations like provident fund registration can be obtained once the number of employees reaches 20, However optional registration with PF Department can be obtained even prior to reaching 20 employee on voluntary basis. Employee State Insurance Corporation (ESIC) registration and compliance thereof is mandatory after the number of employee reaches 10 in number. Drug license is needed in case the business is about dealing with scheduled drugs, food (FSSAI) registration is required if the business is relating to food.