Partnership Firm Registration
Partnership deed drafting and registration of the firm, with the tax registrations that follow.
Deed drafting in 2–5 working days; registration with the Registrar of Firms varies by state
A partnership firm is formed by agreement between two or more persons to share the profits of a business. The agreement — the partnership deed — is the document that governs the relationship, and it is worth more attention than it usually receives.
Partners are jointly and severally liable for the debts of the firm. That means a creditor can recover the whole amount from any one partner, irrespective of the profit-sharing ratio.
What the deed should settle
The profit-sharing ratio is only the start. A deed that prevents later disputes also settles capital contributions and whether interest is payable on them, remuneration to working partners, who may operate the bank account and up to what limit, how a partner may retire or be admitted, how the firm is valued on retirement, and what happens on the death of a partner.
Most partnership disputes we see arise from matters the deed did not address, not from matters it addressed badly.
Registered and unregistered firms
Registration of the firm with the Registrar of Firms is not compulsory in every case, but an unregistered firm faces a significant disadvantage: it cannot enforce a contractual claim through the courts against a third party, nor can a partner sue the firm or the other partners on the contract.
For a firm that contracts with customers or suppliers, that limitation is usually reason enough to register.
Who needs this
- Two or more people starting a business together
- Existing partnerships operating without a written deed
- Firms admitting a new partner or recording a retirement
- Unregistered firms wanting to register with the Registrar of Firms
Eligibility and conditions
- Two or more partners, each with a PAN
- An agreed business activity and profit-sharing ratio
- A place of business, with proof of address
What this covers
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Deed drafting
A deed that settles the matters disputes usually arise from.
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Registration
Application to the Registrar of Firms where registration is sought.
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PAN and TAN
Obtained in the name of the firm.
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GST and Udyam
Registrations where applicable.
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Reconstitution
Deeds for admission, retirement or change in ratio.
How the process works
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Discuss the arrangement
Contributions, roles, ratios and expectations.
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Draft the deed
Prepared and reviewed with all partners.
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Execute
Deed executed on stamp paper of the applicable value.
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Register
Application filed with the Registrar of Firms.
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Tax registrations
PAN, TAN, GST and Udyam as applicable.
Documents required
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PAN and Aadhaar of each partner
For all partners.
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Photographs of each partner
Recent passport-size photographs.
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Proof of business address
Electricity bill with rent agreement, or ownership proof.
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Agreed terms
Capital, ratio, remuneration and operational roles.
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Stamp paper
Of the value applicable in the state.
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Existing deed
Where the firm is being reconstituted.
The list above is indicative. Additional documents may be required depending on your case and the current departmental requirements.
Frequently asked questions
Is it necessary to register a partnership firm?
Registration with the Registrar of Firms is not compulsory in every case, but an unregistered firm cannot enforce a contractual claim through the courts against a third party, and a partner cannot sue the firm or the other partners on the contract.
For a firm that extends credit or contracts with customers and suppliers, that limitation is usually reason enough to register.
Articles on this topic
Starting a business with partners?
Tell us the arrangement you have in mind and we will set out what the deed should cover.