Partnership Firm Incorporation

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A partnership is a type of Business Organization in which two or more parties, who are known as partners, invest money, skills and other resources, and share profits and losses in accordance to the terms of the partnership agreement. The partners may be individuals, businesses, interest-based organizations, schools, governments or combinations.

Partnerships are ideal for small and medium-sized businesses having multiple promoters which are easy to set up, low on costs and have minimal compliance requirements making it a sensible option for such business.

Partnership firms in India are governed by the Indian Partnership Act of 1932. A Partnership firm runs in accordance with the terms & conditions set out in the Partnership Deed. A Partnership Deed is an agreement between the partners in which rights, duties, objectives and other responsibilities are mentioned in a written format. Partnership firms are easier to start and are prevalent amongst small and medium-sized businesses 

There are two types of Partnership firms, registered and un-registered Partnership firms. Registration of a Partnership firm is not compulsory however, it is advisable to register one due to the added advantages. Partnership firms are created by drafting a Partnership deed amongst the Partners and LawRato can help you start a registered or un-registered Partnership firm in India.

Why should you form a Partnership Firm?

1. Easy to start
It can be started with just an unregistered Partnership Deed in 2 to 4 days. However, registration does bring in a few advantages. It will help you to file suits in court against other partners in the firm or any other firm for compliance of rights within a contract or right given by the Partnership Act.

2. Minimal compliance
General Partnerships do not need to appoint an auditor or, if unregistered, even file annual accounts with the registrar. As compared to LLP, annual compliances are also less in partnership. General Partnerships do need to file Income Taxes and, depending on turnover, sales and service tax.

3. Relatively Inexpensive
A General Partnership is cheaper to start than an LLP as there are minimal compliance requirements, it is relatively inexpensive. 

4. Large Investment
Due to the nature of the business, the partners will have to fund the business with startup capital. This means that more the number of partners, the more the money they can invest in the business, which will help the business to gain more stability and better potential for future growth. Also, it leads to more potential profit, that can be equally shared between the partners of the firm.

5. Business Name
A Partnership firm can choose any name as long as it does not infringe on any other registered trademark. However, since the names are not registered, any other firm can also use the same business name until and unless trademark registration is obtained from respective authorities.  

6. Annual Filing not required
As compared to Limited Liability Partnership (LLP) or Company, a Partnership firm is not required to file its annual accounts with the Registrar each year whereas, both of them have to do so.

7. Partnership Deed
In a Partnership firm, the partnership deed is a document that outlines in detail the rights and responsibilities of all partners, ownership & profit sharing ratio, to a business operation. A partnership deed can be registered with the registration authority to give it a legal sanction.

Documents Required for Partnership Registration

• Identity proof of Partners. (PAN Card for Indian Individuals and Notarized Passport Copy for Foreign Individuals)
• Address proof of Partners. (Passport/Driving License/ Aadhaar/Bank Statement or Electricity Bill which is valid, recent and less than 2 months old.
• Proof  For Registered Office In India (Rental agreement or sales deed & copy of electricity bill, Property tax receipt )
• Original copy of Partnership Deed, duly signed by all partners 
• Form No. 1 (Application for registration under Partnership Act) 
• Affidavit declaring intention to become partner 

What is included in our package?

a. Drafting Partnership Deed as per the business structure and partnership requirements that are acceptable to all the partners.
b. Registration of the Partnership Deed with the relevant authorities to make the Partnership a Registered Partnership Firm.
c. Providing DPIN for 3 directors
d. Digital Signature for 3 directors
e. Helping You with Name search & approval
f. Drafting MOA/AOA
g. ROC Registration Fee
h. Firm PAN Card and TIN number as per your requirements

You May Also Want To Know

1. How many people are required to start a Partnership Firm?
A minimum of two members are required to start a partnership firm whereas there is a limit of maximum 20 members.

2. Who can become a partner in a Partnership Firm?
Any individual can become a partner including NRI's. However, the person should be over 18 years of age and must have a valid PAN card. 

3. Do I have to be available in person to incorporate a Partnership Firm?
Since the work is online it’s not mandatory for you to be present physically.

4. How much capital is required to start a Partnership Firm?
There is no minimum limit of capital that is required for starting a Partners

5. Who will register a Partnership Firm?
Partnership firms are registered by the Registrar of Firms, under the Indian Partnership Act, 1932.

6. How to open a bank account for a Partnership Firm?
To open a bank account for a Partnership firm, a registered Partnership deed along with identity and address proof of the Partners need to be provided.

7. What are the annual compliance requirements for a Partnership?
A partnership firm has to file their annual tax return with the Income Tax Department whereas other tax filings such as VAT/CST or service tax may be necessary to be filed from time to time, based on the business activity performed. However, annual report or accounts need not be filed with the Ministry of Corporate Affairs, which is required for Limited Liability Partnerships and Companies.

8. Is an audit required of a Partnership Firm?
It is not necessary for Partnerships to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criteria.

9. Is it possible to convert my Partnership Firm into LLP or a Company later on?
Yes, a Partnership business can be converted into a Company or an LLP at a later date. However, the procedures to convert a Partnership firm into a Company or LLP are expensive, difficult and involves a lengthy process. 

10. In which all cities does LawRato provide Partnership Registration services?
LawRato provides Partnership Registration and other services in all major cities of India.

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