Partnership Firm Registration

What is a Partnership Firm?

A Partnership Firm is a corporate structure in which two or more parties enter into a formal agreement (Known as a Partnership Deed) with each other to manage or operate a business with the object of sharing its profit.

The law which governs Partnerships in India is the Partnership Act of 1932.

As per section 4 of the Partnership Act,1932, Partnership is defined as: “Partnership” is the relationship between two or more persons who have entered into an agreement with each other to carry on a business and share its profits carried on by everyone or any one of them acting for everyone.

Persons who have entered into a Partnership are individually called Partners and collectively it is known as a “Partnership Firm” and the name by which their business is carried out is called “Firm Name”.

According to the above article, there are basic elements that together constitute a Partnership Firm namely,

• The partnership should be result of an agreementbc
• Takes place between two or more parties
• Who concedes to enter into a contract
• With the object of sharing profits
• The business shall be carried on by all or any one of them acting for all

ADVANTAGES OF A PARTNERSHIP FIRM

• EASY TO START: One of the simplest types of businesses to start is a partnership firm. In most instances, a partnership deed is the only prerequisite for creating a partnership firm. As a result, a partnership can be formed on the same day.
• Economical:A private limited company will cost you more when you start it, not to mention the cost of compliance and auditors. Would you really require all of this weight when you are just getting started? A partnership firm on the other hand will cost you only a nominal amount. Further, It is simple to raise capital for a partnership firm. Multiple partners allow for more feasible contributions from all of the partners. Moreover, banks look more favorably on partnership firms when it comes to lending facilities.
• MINIMUM COMPLIANCE A partnership firm is not required to file an annual return with the Ministry Of Corporate Affairs. Moreover, one of the major benefits of a partnership firm is that no statutory audit is required. As a result, a partnership firm is exempt from having its book of accounts audited.
• DECISION MAKING:In any organization, decision-making plays a vital role. Because there is no concept of the passing of resolutions, decision-making in a partnership firm can be quicker. A partnership firm’s partners have extensive powers and in most situations, can conduct any transaction on behalf of the firm, without the agreement of the other partners.
• RISK SHARING:One of the substantial advantages of a partnership firm is that the risk is distributed evenly among all members. Because a partnership firm has multiple partners, so the risk is evenly split out.

REQUIREMENTS TO FORM THE PARTNERSHIP:

Features	Partnership Firm
Definition	A written legal agreement between two or more entities to run and manage a business.
Ownership	Minimum 2 partners Maximum 20 partners
Documentation	Partnership deed
Governance	Under Partnership Act, 1932
Statutory Audit	Not required
Annual return filing	It is mandatory for partnership firm to file income tax return regardless of the income or loss.
Promoter Liability	Unlimited Liability i.e., every partner is accountable personally for the losses of the partnership firm.
Compliance	Low
Profit distribution	Profit must be split among the partners in accordance with the provisions of the partnership deed.
Company name	Should be unique
Registered with	The Registrar Of Firms

Documents required for Partnership Firm Registration

Form 1 i.e., application for partnership registration Copy of original partnership deed Identity proof: PAN card as the primary identity proof of the partners Address Proof: Voter ID card/Aadhar card/ Driving Licence /Passport/ Residence Proof: Most recent bank statement/ Telephone Bill/ Gas/ Water/Electricity Bill/ Appropriate lease agreement Copy of passport-sized photograph of all partners

For Registered office premises: Utility Bill of the proposed registered office No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property)

ELIGIBILITY FOR MSME REGISTRATION:

MSME(Micro, small and medium enterprises) registration or Udyog Aadhar registration can be obtained by any kind of business entity;

• Proprietorship
• Partnership firms
• Private Limited Company
• Public Limited Company
• Limited Liability Partnerships
• Self Help Groups,
• Hindu Undivided Family
• Society
• Trust
• Others

Investment and annual turnover is used for deciding the classification of MSME’s.

Classification	Investment and annual turnover
Micro	< Rs.1 Crore & < Rs. 5 Crore
Small	< Rs. 10 Crore & < Rs. 50 Crore
Medium	< Rs. 50 Crore & < Rs. 250 Crore

Manufacturing, wholesale, service industries, and retail trade are covered and are eligible to apply for MSME registration except for the motorcycles and motor vehicles wholesale and retail trade.

Registration of MSMEs is completely online and the Udyam Registration portal ( udyamregistration.gov.in ) is the official portal for registering MSME’s.

Procedure for Income Tax Return Filing of Partnership firm;

Partnership firm needs to file their return in Form ITR 5. This form can be filed online with the help of the DSC ( Digital Signature Certificate ) of the designated partners on the Income Tax website.

The procedure to file Income Tax Return is completely Online. This involves the following stages:

• Registration of Partnership firm on Income Tax website
• Prepare Balance Sheet of the Partnership firm
• Prepare a statement of Profit and Loss
• Prepare Partnership firm’s Income Tax Computation sheet
• Pay online the Partnership firm’s Income Tax
• Download Form 5 of Income Tax Return
• Fill Financial information of the partnership firm
• Upload ITR with partner’s DSC
• e-Verify the Income Tax Return

Steps for online registration of a partnership firm:

The procedure to be followed for conversion is described below:

• 1

  Apply for Registration

  Take 1 working Day

  Apply for registration and submit the application to the Registrar of firms. The application should contain the name and address of the proposed firm along with the name and address of each partner, their respective joining dates, and the establishment year of the firm.

• 2

  Reserve name

  Take 1 working Day

  Reserve a name for the partnership firm: Choosing a name for the partnership firm holds a special significance in a partnership firm registration. There are a few things to keep in mind while selecting a name such as a name should be unique and original and it should not have a conflict of interest with any existing firm.

• 3

  Create a partnership deed

  Take 1 working Day

  Create a partnership deed covering all the matters that entail the mutual rights, obligations, and liabilities of the partners in the management and conduct of the firm’s affairs. General details that are required in a partnership deed are

  • The Name and address of the firm along with the respective names and addresses of the partners
  • Nature of business to be conducted
  • Duration of partnership
  • Date of business commencement
  • Capital contribution by each partner
  • Except to the extent of shares held, the proprietor should not obtain any further benefits, either directly or indirectly.
  • Ratio of profit distribution among partners etc.

• 4

  Stamping of Deed

  Take 1 working Day

  Take a printout of the partnership deed on a stamp paper and it should be duly signed by all the partners and notarized.

• 5

  Obtain PAN and TAN

  Take 1 working Day

  Concerned department will issue the physical copy of the partnership firm PAN card within a few days.

• 6

  Apply for MSME registration

  Take 1 working Day

• 7

  Open a current bank account

  Take 1 working Day

Is GST registration necessary for partnership firms?

GST registration is mandatory for each partnership firm whose turnover crosses 40 lakhs every year. However, registration may be required in some cases even if the firm’s turnover does not cross the predefined turnover. For example, for any e-commerce firm, it is essential to have a GST certificate.

GST registration for partnership firms

To take advantage of the input tax credit, any company that buys, sells, or provides goods and services must register under the Goods and services tax(GST).

Registration for GST can be done online from the website. To take advantage of the input tax credit, any company, firm, or individual that buys, sells, or provides services must register under the Goods and Services Tax (GST).

GST registration can be done online at www.gst.gov.in, from there a Temporary Registration Number(TRN) is generated for the application.

Documents required for GST registration of a partnership firm

• Passport size photographs of all partners.
• PAN card of all partners
• Aadhar card of all partners.
• PAN card of the partnership firm
• Mobile number and email id of all partners
• Partnership deed
• Address proof of the firm (Most recent bank statement/ Telephone Bill/ Gas/ Water/Electricity Bill/ Appropriate rent/ lease agreement)- not less than 2 months old
• No Objection Certificate from the landowner, if rented property
• Primary signatory approval letter

After the application is submitted, an Application Reference Number(ARN) is generated from where the status of the application progress can be tracked. Once the request is approved by the tax officer, then the Certificate of Registration is issued online.

GST registration process for a partnership firm:

• Log in to the GST web portal
• Fill up the details in the PART-A of the form(PAN, email and mobile number)
• Portal will verify your details via an OTP
• Upload the required documents
• Use the received number to access and fill out details in PART-B of the form
• After submitting part B, you will receive an Application Reference Number(ARN)
• GST officer will verify your submitted details
• Within 7 days you will receive an intimidation regarding acceptance or rejection of your application
• If asked, you will have to further submit the required documents
• After all the details have been clarified, you will be assigned a GSTN number for your partnership firm.