Introduction
Partnership firms are one of the most often chosen business structures amongst the entrepreneurs in India. A partnership firm is one of the most cost-effective and simple business structures to register. To register a partnership firm, it is essential to have legal guidance to ensure that the entire registration of the partnership firm is done without any hiccups. Registering a partnership firm requires a lot of complex and lengthy steps, which, if done under legal expertise, works better.
Why register a partnership firm in India
It is advisable to register a partnership firm in India because:
- It gives legal recognition to the company.
- It helps in protecting the legal rights of the partners.
- It gives the partnership firm the ability to sue and get sued.
- It makes it easy to access loans and other financial aid.
- It helps in dispute resolution.
Steps to register a partnership firm in India
Registering a partnership firm in India is not compulsory in nature. However, registering a partnership form gives so many benefits that people choose to register it. Following are the steps to register a partnership firm in India:
Choose a name for the business
The first and foremost step for registering a partnership firm is to choose an appropriate name for the business. However, the name should be such that it does not violate the trademark laws in India. The names which are selected must be appropriate and unique in nature. The name of the firm also cannot have any prefix or suffix which shows that they are affiliated with the government.
Apply for trademark
To ensure that the firm’s name which is chosen is unique and novel, a trademark search can be conducted to ensure no other firm is with a similar or identical name. After the trademark search is completed and the name is novel, a trademark application can be done for it as well.
Prepare a partnership deed
The next step in registering a partnership firm is to prepare a partnership deed. The deed of partnership is considered one of the most vital documents for registering a partnership firm in India. There are some important clauses which should be present in the partnership deed.
Let’s take a look at some of the important contents of the partnership deed:
Contents of partnership deed
Name of the company
The name clause in the partnership deed is one of the vital contents. The company should be cautious when they are choosing the name to ensure no legal complexities arise in the later stages. The name is to be reserved with the Registrar using Form No. INC 1.
Object of the company
The next important clause in the partnership deed is the object clause. The main object of the company and its establishment has to be included as well.
Place of business
The place of the business has to be mentioned in the partnership deed.
Address of the business
The address of the business is the next important thing which is to be mentioned along with the palace of the business.
Partnership duration
The duration for which the partnership is to be kept is also mentioned in the partnership deed. For instance, the partnership can be for 4 years or 5 months etc.
Ratio of profit and loss sharing
The ratio in which the profit and loss is to be shared is also included in the partnership deed. The liability of the partnership is one of the key subjects which often causes disputes between the partners. So, it is advised to add a clause on the liability and profit and loss sharing in the partnership deed.
There are many other clauses which can be added along with these mentioned as per the requirement of the partners. The partnership deed has to be notarised too.
Prepare all the essential documents for partnership firm registration
There are many documents which are needed at the time of registering a partnership firm in India. The vital documents are:
| Identity proof of the partner | Aadhaar Card, PAN, Voter ID (self-attested) |
| Proof of address | Utility bills, rent agreement, NOC |
| Partnership Deed | Drafted on appropriate stamp paper and should be notarized as well |
| Address proof of the business place | Registered office’s utility bills |
| Passport-size photos | All the partners |
| PAN Card of the Firm after the registration has been completed | Crucial for banking and taxation purposes |
Submit the application for registration
After all the important details are filed and the documents are attached, the next vital step in the procedure is to submit the application for registration. You have to first visit the ROF portal, which is the registrar of firms, and create an account on it. Then you have to proceed to fill out the form. After that, you have to attach all the documents which are listed, pay a fee and submit the application.
Verification and approval of the partnership firm registration
As soon as the application is submitted, the next step is verification and approval of the partnership firm. All the details which are added along with the documents in the application are verified by the authorities. If all laws are in compliance, then the registrar approves of the registration. The certificate of registration is given at the end as proof of registration of the partnership firm.
Post registration compliance for partnership firm in India
There is much compliance which is to be done after the registration of the partnership firm. The partnership firm may need different types of licenses, books of accounts, GST registration, etc.
What happens if you do not register a partnership firm in India
As discussed above, partnership registration is not compulsory in India. However, if you do not register a partnership firm, then there are many effects on partnership firms (Section 69 of the Indian Partnership Act, 1932). You lose the ability to sue other parties. The partners have very limited legal rights if the partnership firm is not registered. It can also cause problems in debt recovery. The firm also has less protection when it enters into contracts or business agreements.
Conclusion
Registering a partnership firm might not be mandatory in India, but it is highly advisable. It is always advised to all growing businesses and entrepreneurs to register their partnership firm under the legal guidance, as it provides a number of benefits to both the partner and the firm. Legal compliance is the foundation for a successful business, and registration of partnership firms helps in achieving that.
Frequently Asked Questions (FAQs)
Who is responsible for the registration of partnerships in India?
The registrar of companies of each state is responsible for the registration of partnerships in India.
How long does it take to register a partnership firm in India?
The time period to register a partnership firm may range from a couple of days to a couple of months. If there are no problems in the application, then the registration will complete faster.
