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Know More About PARTNERSHIP FIRM REGISTRATION
Introduction and Its Compliance
A Partnership Firm is a business structure where two or more individuals come together to manage and operate a business as per the terms outlined in a Partnership Deed.
It is governed by the Indian Partnership Act, 1932. While registration is not mandatory, a registered partnership enjoys legal benefits such as the ability to file suits against third parties or partners and access to better credibility.
Compliance for a partnership firm involves maintaining proper books of accounts, filing Income Tax Returns and complying with GST, TDS and other applicable tax laws, depending on the nature of the business and turnover.
Why It Is Needed
A partnership firm is best suited for small and medium businesses that are started by two or more individuals looking to share responsibilities, resources and profits.
It offers ease of formation, operational flexibility and is ideal for family businesses or professional services. Registration gives the firm legal recognition and protects the partners in various commercial dealings.
Benefits and Advantages
- Easy Formation A partnership firm is easy to set up with minimal paperwork. The only core requirement is a partnership deed and registration is optional, though recommended.
- Shared Responsibility All partners share the duties, risks and profits of the business. This reduces individual burden and improves business efficiency.
- Operational Flexibility There are no stringent regulatory compliances, allowing partners to operate the business with more freedom and less bureaucracy.
- Better Decision-Making With multiple partners, there is more experience and skill brought to the table, helping in more informed and quicker decision-making.
- Access to Funds It becomes easier to raise capital through partner contributions or bank loans since the firm represents a group effort and shared liabilities.
Eligibility Criteria
General Requirements
- Minimum two individuals are required to form a partnership.
- Partners must be competent to contract (above 18 years and of sound mind).
- Indian residents or NRIs can become partners (with special approvals for NRIs).
- No maximum limit on number of partners for unregistered firms; registered firms can have up to 50 partners.
Documents Required
For Partners
- PAN Card
- Aadhar Card or other ID proof
- Passport-size photograph
- Address proof (Voter ID, Driving License, etc.)
For Registered Office
- Electricity bill/utility bill (not older than 2 months)
- Rent agreement (if rented)
- NOC from the property owner
For Registration
- Partnership Deed with business details, capital and duties
- Affidavit and signed application form by all partners
Steps for Getting Registration
- Draft Partnership Deed: Include details of partners, business activity, duties, profit-sharing ratio, etc.
- Get Deed Notarized: Notarize the deed on stamp paper as per state stamp duty rules.
- Apply for PAN & TAN: Get PAN and TAN issued in the firm's name.
- Register with Registrar of Firms: Submit deed, forms, and KYC documents. Registration is optional but highly recommended.
- Open Bank Account: Open a current account in the firm’s name using PAN and registration documents.
Timelines
Overall Setup Time
7 to 10 working days
Timelines may vary depending on document verification and government approvals.
Fee
Frequently Asked Questions
Because every great business starts with the right answers.
No, but it is highly recommended for legal enforceability and operational advantages.
Yes, if it is registered, it can hold property in its name.
Firm’s profits are taxed at 30% plus cess. Partner’s share is tax-free if firm pays taxes.
A minor can only be admitted to the benefits of a partnership, not as a full partner.
Yes, it can be converted by following the prescribed legal process.
Only registered firms can sue or be sued under the Indian Partnership Act.
Up to 50 partners for registered firms. No limit for unregistered firms.
Yes, it can apply for business loans with partner consent and valid documentation.
No, once registered, the partnership does not need renewal unless state-specific laws require it.
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Shaperz India Grain Private Limited
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