Partnership firm registration
A partnership firm is the relation between two or more persons who agree to share the profits of a business carried on by all or any of them acting for all. Company Suggestion drafts the deed and files the firm with the Registrar of Firms.
What is a partnership firm?
The Indian Partnership Act, 1932 governs a partnership firm.
A firm needs at least two partners. The Companies (Miscellaneous) Rules, 2014 prescribe 50 as the maximum number of persons.
The firm is not a separate legal entity from its partners. Each partner is personally liable for the debts of the firm.
The partnership deed records the profit share, the capital each partner brings, and the terms for admitting or retiring a partner. The deed is written on stamp paper under the Indian Stamp Act, 1899.
Registration with the Registrar of Firms is optional. Section 69 of the Partnership Act stops an unregistered firm from suing to enforce a right arising from a contract.
Who should register a partnership firm?
Two plans fit a partnership firm:
- Two or more owners who will share profits and accept personal liability.
- A small business that wants a written deed without MCA incorporation.
Owners who want liability limited to an agreed contribution should register an LLP instead.
Which documents does a partnership need?
The Registrar of Firms asks for four documents with the application.
- The application signed by all the partners, or by their authorised agents
- A certified copy of the partnership deed
- PAN and address proof of each partner
- Proof of the principal place of business
What are the registration steps?
Company Suggestion registers a partnership firm in four steps.
- The partners agree the profit share, capital and retirement terms.
- The deed is printed on stamp paper and signed by every partner.
- The application goes to the Registrar of Firms of the state where the firm sits.
- The Registrar records the firm and issues the certificate. The firm then applies for its own PAN and opens a bank account in the firm name.
Frequently asked questions
4 questions cover the rules that decide this registration.
Is partnership registration compulsory?
No. The Indian Partnership Act, 1932 makes registration with the Registrar of Firms optional. An unregistered firm cannot sue to enforce a right arising from a contract.
Do partners have limited liability?
No. Partners of a partnership firm are personally liable for the debts of the firm. An LLP limits each partner’s liability to the agreed contribution.
How many partners can a firm have?
A partnership needs at least two partners. The Companies Act, 2013 and the Companies (Miscellaneous) Rules, 2014 prescribe 50 as the maximum number of persons in a partnership.
Does a partnership firm need a PAN?
Yes. The firm applies for its own PAN. Registration with the Income Tax Department is separate from registration with the Registrar of Firms.