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A partnership is easy to form since no complex business formalities are required to be fulfilled. The Partnership Act, 1932 regulates the registration of partnership firms in India. A minimum of two persons is required for the registration of the partnership firm.
Partnership registration is not compulsory and is at the discretion of the partners whether they want to register the partnership firm or not. But a partnership firm cannot avail legal benefits if it is not registered, hence it is always advisable to register it.
An application form along with fees should be submitted to the Registrar of Firms of the State in which the firm is situated for registering a partnership firm. The application has to be signed by all partners or their agents. After the Registrar of the Firms is satisfied with the correctness of the application, he will register the firm in Register of Firms and issue Certificate of Registration.
The documents required for partnership formation (whether registered or not) are –
Although partnership deed can be oral, generally a partnership deed is written to avoid any future conflict. Partnership deed is created on a judicial stamp paper obtained from the respective State Registrar Office and has to be signed by all the partners. It contains rights and duties of the firm and the partners.
PAN card of firm – Partners need to apply for PAN of the firm. Form 49A has to be filed to apply for a PAN. It should be filled online by visiting https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html
It can be filed online if the authorised partner signs the application using a digital signature certificate. Else, the application and requisite documents have to be sent to the nearest PAN processing centres available across the country.
Address Proof of firm – If the registered office place is rented, rent agreement and one utility bill (electricity bill, water bill, property tax bill, gas receipt etc.) have to be submitted. Also, NOC from landlord will be submitted.
If the registered office place is own, utility bill has to be submitted mentioning the name of the owner. Also, a NOC from the owner (owner as mentioned in utility bill) has to be submitted.
The partners need to submit partnership deed, ID and address proofs of the firm as well as the partners to the Registrar of Firms. With it, an affidavit is also required to be submitted certifying that all the details mentioned in deed and documents are correct.
For obtaining a GST registration, a firm needs to submit PAN number, address proof and identity & address proofs of the partners. Authorised signatory will sign the application either using a digital signature certificate or E-Aadhar verification.
For opening a current bank account, a firm needs to submit the following documents:
It is not mandatory to register a partnership firm as per the provisions of the Partnership Act, 1932. However, it is better to register a partnership firm. If the firm is not registered it cannot avail any legal benefits provided to the firm under the Partnership Act, 1932.
The registered firm or its partners can file a case against third party on breach of a contract. If the firm is unregistered, the partnership firm cannot file a case against the third party but the third party can file a case against the firm. Also in the case of a dispute with a third party, the unregistered firm or any of its partners cannot claim a set off.
The registration of the Partnership Firm in India can take up to approx 10 working days. However, the time taken to issue the Certificate of registration may vary as per the regulations of the concerned state. The registration of Partnership Firm is subject to Government processing time which varies for each State.
In a certain sense, a partnership certification of incorporation can be revoked, at the time of dissolution. A dissolution can be brought upon automatically when all partners or all partners except one partner are declared insolvent or if the firm is carrying unlawful activities.
A partnership firm can be registered at the time of its formation or even subsequently at any stage. However, it is advisable to get the firm registered as soon as it starts its business for availing the rights that can be enjoyed only by a registered firm.