Partnership Company Registration In India – Everything you need to know
TDS on Cash Deposits and Withdrawals: Understanding Regulations, Penalties, and More
June 28, 2023
Goods and Services Tax (GST) on Electronic Items in India Reduced
July 4, 2023
Partnership is a popular business entity in India where two or more individuals come together to carry out a business and share the resulting profits in an agreed ratio. It is the most prevalent form of business formation in the country due to its easy formation and minimal compliance regulations. However, partnership companies often face the dilemma of whether to get registered or not. In this article, we will explore everything you need to know about partnership company registration in India, whether you choose to register or not.
In India, there are two types of partnership firms: registered and unregistered. According to the Indian Partnership Act of 1932, the only requirement for a partnership business is the presence of a partnership deed between partners. There is no immediate requirement for a partnership firm to be registered under the Act. Additionally, there are no penalties for operating an unregistered partnership firm, and registration can be done at any time after its formation.
The first step in creating a partnership firm is the formation of a partnership deed, which acts as an official agreement between the partners. This deed includes important details such as the names and addresses of partners and the firm, capital contributions, profit sharing ratios, rights and duties of each partner, and provisions for retirement, death, or dissolution of the firm. While a partnership deed can be in written or oral form, having a written deed is advisable for future reference and dispute resolution.
Although registration is not mandatory, there are certain benefits that a registered partnership firm can enjoy. Unregistered partnership firms have limitations, such as partners being unable to file suits against the firm or other partners in case of conflicts. Registered firms, on the other hand, can avail themselves of the benefits provided under the Partnership Act and have the ability to file suits in court. Set off in disputes with third parties is also not allowed for unregistered firms. Therefore, it is recommended to register your partnership firm to enjoy these benefits over time, if not immediately.
The registration process of a partnership firm is carried out under Section 58 of the Partnership Act, 1932, by the Registrar of Firms of the respective state where the firm is located. The Registrar ensures compliance with all requirements, maintains the records, and issues a registration certificate to the firm. To register a partnership firm, you need to submit Form 1, an affidavit, the original certified copy of the partnership deed, proof of the firm’s location, and identity and address proofs of the partners.
FAQs
The period may vary from state to state. It also depends on the time in which the letter of incorporation is issued.
Generally, it can take about 12 to 14 working days to get a firm registered in India.
- When the name of the partnership firm is identical to an existing firm
- If the name includes words like the emperor, prince, crown etc.
- If the object of the business is illegal
Certification of Registration is cancelled when the partnership is dissolved. A partnership firm can be dissolved when all the partners of the firm except one gets insolvent or when the firm has been carrying an illegal business all this time.
In conclusion, partnership companies in India have the option to register or remain unregistered. While registration is not mandatory, it is advisable to enjoy the benefits and legal protections offered by a registered partnership firm. The partnership deed plays a crucial role in outlining the rights and responsibilities of each partner. The registration process involves submitting the necessary documents to the Registrar of Firms. By understanding the requirements and implications of partnership firm registration, entrepreneurs can make informed decisions for their businesses.
