Firm Registration



What is Partnership Firm?

Partnership is an association of two or more like minded persons formed with a common objective to establish a lawful business house of their choice with the idea of earning profits. However, in any business enterprise the possibility of its incurring loss cannot be ruled out. Therefore, all partners of a firm mutually agree to share all profits and losses of the business amongst them according to their predetermined shares/proportions fixed by them in the partnership agreement. Persons who have entered into partnership with one another are called individually partners and collectively a firm, and the name under which their business is carried on is called the firm name.

F.A.Q

The Partnership Act provides that both registered and unregistered partnerships are valid and recognised by law. Partnership registration is not compulsory but is beneficial due to disadvantages of non-registration. Mostly, the businesses at initial level prefer unregistered partnership till they reach stable level. The unregistered partnership can be registered at any time after its formation.
Formation of Partnership Firm does not require any minimum amount. It can be started with any amount of capital contribution by the partners. The Partners can contribute in any amount agreed and in any form being tangible (cash, premise) or intangible (goodwill, intellectual property).
     • You cannot sue a third party
     • You cannot go the courts if there is any disagreement between the partners inter-se
     • Cannot claim set-off in a dispute with third party
Usually it takes about 15-20 days to register a Partnership Firm in India. However, the registration period varies amongst State to State.
One only needs to maintain their books of accounts and Financial Statements. IT Return needs to be filed accordingly.
No, audit is not required. However, if the turnover exceeds 2 crore then tax audit is required.
Minimum number of partners required to start a Partnership Firm is two (2).
The application if to be filed with the Registrar of Firms.
Following points are to be kept in mind while drafting the Partnership Deed:
     • Name and place of business
     • Duration of the partnership.
     • Shares of each partnership in the profits and losses of the business.
     • The management of the business.
     • Nature of principal work agreed to be carried on in partnership.
     • Number of partners and initial capital employed by each one of them.
     • Provision and the manner for raising future capital, if required.
     • Work distribution, if any, of each of the partners.
     • Operation of Bank Accounts
     • Accounting system of the business.
     • Division/Devolution of goodwill of the business in case of dissolution of partnership.
     • Distribution of assets and liabilities amongst partners at the time of dissolution.
Yes, a partnership firm can be converted easily into a Limited Liability Partnership or a Private Limited Company.