Partnership Firm Registration
A partnership firm is an organization which is formed with two or more persons to run a business with a view to earn profit.
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What is Partnership Registration?
A partnership is an association of two or more people (Max limit up to 10), who agree to carry on the business together by combining their financial funds and managerial abilities and skills and share its profits and losses. A Partnership firm is a legal establishment registered by executing a partnership deed. Even though this form of business is governed under the Indian Partnership Act 1932, the partners are at free will to decide on various terms pertaining to share of profits/salaries and other related matters. It has less legal regulation as compared to Pvt Ltd Company or Limited liability partnership. In India normally all partnership firms are general partnerships.
At Super CA, we are always there to assist you in preparing or drafting your partnership deed at your terms and conditions. Our team comprises drafting experts, legal advisors, professional CAs and CSs who hold rich understanding in their particular field. We are currently growing with our community of clients day-by-day. To learn more about hassle-free partnership company registration kindly reach out to us.
Understanding Partnership Registration
Navigating the partnership registration process is a crucial step in establishing your business. While you can apply directly, SuperCA offers a seamless experience, guiding you through each step and providing the expertise to ensure your partnership starts on the right foot.
Choose Your Plan
₹2000+GST
PLANS :
PARTNERSHIP FIRM
IT INCLUDES CHARGES OF DRAFTING/ DEED MAKING, NOTARY CHARGES
₹2000 PLUS GST
*Stamp paper charges applicable as per the state.
Transparent Pricing: Kickstart your partnership journey with our comprehensive support starting at just ₹2000+GST. While direct registration options exist, SuperCA enhances this process with expert deed drafting, notary services, and personalized guidance, ensuring no detail is missed. *Stamp paper charges as applicable.
Key Features of Partnership Firm
1. Number of Partners:
Minimum number of people required to start a partnership firm is two and maximum limit is 10 in case of banking business and 20 in case of all other types of business.
2. Contractual relationship:
A written agreement known as partnership deed which is signed by all the partners, binds them in a contractual relationship. The partnership is governed by the Indian Partnership Act, 1932 where the deed governs the operation, management and decision-making methodologies and other activities
3. Voluntary Registration:
Registration of partnership firms is not mandatory by law. It is entirely up to the partners and business owners to make this decision.
4. Competence of Partners:
Every partner must be competent enough to enter into the partnership agreement. He should not be a minor, or of unsound mind or insolvent.
5. Sharing of Profit and Loss:
In partnership firms all the profits and losses are shared by the partners in any ratio as agreed. If it is not given then they share it equally.
6. Unlimited Liability:
Liability of partners of a partnership firm is unlimited. They are jointly held liable for the debts and losses of the firm.
7. Legal Status:
Partnership firms have no distinct legal status separate from their partners.
8. Perpetual succession:
Partnership Firm does not have perpetual succession
9. Property Purchase :
A partnership firm cannot purchase movable/immovable property in its name. It must be purchased in the name of partners
10. Partners’ Dependency:
In a Partnership firm, the resignation or death of any of the partners would have a huge impact and the Partnership would stand dissolved & have to be reconstituted
ADVANTAGES OF PARTNERSHIP FIRM
Simple Formation
It is very easy to form. Simple agreement needs to be executed.
Flexibility of Changes
There is also flexibility of changes in partnership firm as easy as in proprietorship firm. Such changes cannot be implemented in a company with ease because of the restrictions imposed.
Sharing of Risk
Sharing of risk is also very important feature of such type of formed firm. Since Profit or Loss of said firm is shared by partners, which ultimately brings less burden of loss/ expenses on each individual.
Less Statutory Obligations
There is no statutory obligation on the part of partnership firms to disclose financials to public as in company. Thus, it is more secretive.
Efficiency and Effectiveness
In partnership firm, various people are part of one firm, which means various minds are working for one oriented goal. Which enhances the possibility to achieve goal efficiently and effectively with in desired time?
Efficiency and Effectiveness
In partnership firm, various people are part of one firm, which means various minds are working for one oriented goal. Which enhances the possibility to achieve goal efficiently and effectively with in desired time?
Various Experts
It consist various people, who can have different skill and expertise, which can be useful for business.
Economic
There is also very less burden of statutory compliance as compared to company. Therefore, it is also very economic.
Dissolution
Partnership firms can be dissolved by agreement, mutual consent, insolvency, certain contingencies, and by court order. The dissolution procedure for a registered Partnership firm is reliable and quick.
Importance of Registering a Partnership Firm
In the digital age, starting a business partnership should be as straightforward and hassle-free as possible. This is where online partnership firm registration comes into play, offering a logical solution for modern entrepreneurs.
The first step in this process is creating a partnership deed. This document serves a pivotal role, laying down the rules of engagement, so to speak. It outlines the responsibilities and rights of each partner, creating a transparent and structured environment from the get-go. It’s a preventive measure, averting potential disputes by establishing clear guidelines, which in turn fosters a harmonious business relationship.
But the benefits of partnership firm registration extend beyond just clarity and harmony. It facilitates a smoother pathway to obtaining business loans and necessary licences, essentially streamlining the bureaucratic processes that often bog down new ventures. Moreover, it lends a formal stature to your firm, enhancing its credibility in the business ecosystem.
In essence, opting for online firm registration is not just about adhering to legal formalities; it’s a strategic move grounded in logic. It simplifies the registration process, saving time and effort, which can be channelled into building a successful business partnership.
Partnership Firm vs. LLP
The most used partnership types are General Partnership and Limited Liability Partnership (LLP). Both the structures are a similar form of entities but they differ due to the way of functioning and their terms and conditions and many more. Both entities are governed under different regulations by the government, they both enjoy different types of liabilities, advantages/disadvantages and freedom in their domain. Hence, you should have a clarity on the kind of business you are into, your goals and objectives before choosing one.
| Parameter | |||
|---|---|---|---|
| Number of Partners | A General Partnership firm can have two or more members with a maximum limit of 10 whereas a Limited Liability Partnership must be registered under the Act with a minimum of two partners. There is no limit on the maximum number of partners in LLPs. Both LLP and partnership firms must have a minimum of 2 partners. If the number of partners reduces below 2 in a partnership firm due to any reason the firm would stand dissolved. But, in case of LLPs if the number of partners reduces below 2, the sole partner can find a new partner without actually dissolving the firm. | ||
| Legal Status | Partnership firms have no distinct legal status separate from its partners whereas a LLP is a body corporate having a separate legal entity and has perpetual succession. | ||
| Compliance | For LLPs, it is mandatory to file the annual return to the Ministry of Corporate Affairs (MCA) and the ROC annually in the prescribed format . Whereas, a partnership firm requires no annual return filing. | ||
| Transferability | Shares can be transferred to another person after obtaining the permission of all the Partners in a Partnership. The transferability of a Partnership is unwieldy, whereas the shares of an LLP can be transferred. However, the transferee is not allowed to become a Partner automatically. The share of an LLP can be transferred to another person more easily. | ||
| Perpetual succession | Partnership Firm does not have perpetual succession whereas LLP has perpetual succession. | ||
| Property Purchase | A partnership firm cannot purchase movable/immovable property in its name. It must be purchased in the name of partners. On the contrary, LLP can purchase movable / immovable property in its name | ||
| Audit of accounts | Partnership firms are only required to have tax audit of their accounts as per the provisions of the Income Tax Act In LLP, if the firm’s turnover does not go beyond, in any financial year, Rs. 40 lacs, or whose turnover does not go beyond Rs.25 lakhs is not obliged to get its accounts audited. Except all LLPs are required to get their accounts audited annually as per the provisions of LLP Act 2008. | ||
| Agreement between Partners. | The partnership is governed by the Indian Partnership Act, 1932 where Partnership Deed governs the operation, management and decision-making methodologies and other activities. Whereas, Limited Liability Partnership Act, 2008 governs LLP in India. The operation, management and other activities of the LLP are accordance to the LLP Agreement | ||
| Manageability | Partnership firms are difficult to operate or move across India because the Registrar of firms that register the partnership firms are controlled by the state government. But, in case of LLPs, they can open a bank account and shift their registered office anywhere in India and as it is registered under the MCA. | ||
| Partners’ Dependency | In a Partnership firm, the resignation or death of any of the partners would have a huge impact and the Partnership would stand dissolved & have to be reconstituted whereas in LLP, the subsistence is not dependent on its partners. The changing of partners of the LLP will not affect the existence or operations of the firm. | ||
| Dissolution | Partnership firms can be dissolved by agreement, mutual consent, insolvency, certain contingencies, and by court order. On the other hand LLP can be dissolved voluntarily or by order of the National Company Law Tribunal. | ||
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FREQUENTLY ASKED QUESTIONS
Please note, SuperCA provides independent assistance for your partnership firm registration, bringing together expert drafting and legal advisory services. While we specialize in simplifying the registration process, it's important to clarify that we are not affiliated with or endorsed by government agencies. Information provided is for general purposes only and not professional advice. Consult our qualified professionals for personalized guidance.
