Online Partnership Firm Registration in India

What is a Partnership Firm?

A partnership firm is a business structure that is owned and operated by two or more people. The partners share the profits and losses of the business, as well as the responsibility for managing it. Partnerships are relatively easy to form and maintain, and they offer a number of advantages. Partnerships are governed by the Indian Partnership Act, 1932.

A partnership firm in India can have a minimum of two partners and a maximum of 20 partners for non-banking businesses. In the case of banking, there can be a maximum of 10 partners. The partners have unlimited personal liability, which means they are personally responsible for the debts and obligations of the firm. This is a significant drawback compared to limited liability entities like companies.

The partners decide on the distribution of profits and losses as per the terms specified in the partnership deed. Profit-sharing ratios can be equal or based on the capital contribution or other agreed-upon criteria.

Characteristics of Partnership Firm

• Number of Partners:
  A partnership firm must have at least two partners to exist, but it cannot have more than 20 partners for non-banking businesses. In the case of banking, the maximum number of partners is limited to 10.
• Profit Sharing:
  The partnership deed specifies how profits and losses will be shared among the partners. Profit-sharing ratios can be equal or based on the contributions of each partner, as agreed upon in the partnership agreement.
• Separate legal entity:
  A partnership firm is not a separate legal entity from its partners. This means that the partners cannot sue or be sued in the name of the firm.
• Continious succession:
  A partnership firm continues to exist even if one or more partners die or retire. The remaining partners can continue the business or admit new partners.
• Unlimited Liability:
  One of the defining characteristics of a partnership firm is that the partners have unlimited personal liability for the debts and obligations of the firm. This means that personal assets of the partners can be used to settle the firm's debts if the firm's assets are insufficient.
• Lack of Statutory Formalities:
  While some countries require registration and compliance with specific laws for partnerships, partnerships generally have fewer statutory formalities and regulatory requirements compared to corporations.

Steps for Online Partnership Firm Registration

• Obtain DSC and DPIN of Partners:DPIN is a unique number that are assigned to each partner of a partnership firm & Digital Signature Certificate (DSC) is used to authenticate electonic documents.
• Choose a name for the partnership firm:The name must be unique and not already in use by another firm. You can check the availability of a name on the MCA website.
• Draft the partnership deed & Submit Registration Application :This is a legal document that outlines the terms and conditions of the partnership agreement. It should be drafted by a lawyer.
• Registration Certificate:The firm will get the Registration Certificate and be registered in the Register of Firms if the Registrar is satisfied with the registration application and supporting materials.

Need for Partnership Firm online Registration

If there is an agreement, it must be in writing and is known as a partnership "Partnership Deed" or "Deed of Partnership." It is usually recommended to register your partnership firm and formalize the partnership in order to take advantage of the legal advantages and avoid lots legal limits. The following requirements must be fulfilled

• It can be simply assured, not required to be registered or in writing.
• The business must be run by all of the interested partners, or by one of them operating on their behalf, and they must sign into an agreement to share the business profits.
• Two or more people/individuals are required

Eligibility of Firm Registration Online

The partnership agreement is open to anybody who is able to legally sign contracts. Any person who fulfills the legal criteria for majority, is of sound mind, and is not prohibited from entering into a partnership by any laws to which they are subject may do so.

Here are some following people are eligible to enter in a partnership firm:-

• Individuals: A person may become a partner in the partnership firm if they are legally capable of doing so. In a business with more than two partners, a person may participate as both himself and as a Karta, or representative, of the Hindu undivided family.
• Firms:A partnership firm cannot associate with another firm or person since it is not a person. A partner in a partnership firm, however, is free to start a new business venture with a different person and divide the earnings with his other parent company partners.
• Hindu Undivided Family: A Karta of the Hindu undivided family may participate in a partnership in his or her own capacity as long as they have contributed their own work and skills.
• Company: A company may register as a partner in a partnership firm if its objectives permit it to do so given that it is a legal entity.
• Trustee: Unless its constitution or objectives prohibit it, trustees of private religious trusts, family trusts, Hindu mutts, and other religious endowments are legal persons and may thus enter into partnerships.

Partnership Deed Format

This Deed of Partnership is made on this [Date] day of [Month], [Year] between:

1. [Name of Partner 1], son/daughter of [Father's Name], residing at [Address] (hereinafter referred to as "Partner 1");
2. [Name of Partner 2], son/daughter of [Father's Name], residing at [Address] (hereinafter referred to as "Partner 1");

Recitals:

• The Partners have agreed to enter into a partnership for the purpose of carrying on the business of [Business Name] (hereinafter referred to as "the Business").
• The Partners have agreed to contribute capital and share the profits and losses of the Business in the manner hereinafter set out.

Now, this Deed witnesseth as follows:

1. Name of Partnership: The name of the partnership shall be [Business Name]
2. Principal Place of Business: The principal place of business of the partnership shall be [Address].
3. Commencement of Partnership: The partnership shall commence on [Date] and shall continue until it is dissolved in accordance with the provisions of this Deed.
4. Capital: The initial capital of the partnership shall be Rs. [Amount], which shall be contributed by the Partners in the following proportions:
• Partner 1: Rs. [Amount]
• Partner 2: Rs. [Amount]
5. Profit and Loss Sharing:The profits and losses of the partnership shall be shared by the Partners in the following proportions:
• Partner 1: [Percentage]%
• Partner 2: [Percentage]%
6. Management of the Business:The Business shall be managed by the Partners jointly and severally. Each Partner shall have equal powers and responsibilities in the management of the Business.
7. Drawings:Each Partner shall be entitled to draw a monthly salary of Rs. [Amount].
8. Bank Account:The partnership shall maintain a bank account in the name of the partnership with [Bank Name]. All transactions of the partnership shall be made through the bank account.

Document Required for Online Partnership Firm Registration

Registering a Online partnership firm involves certain documentation and formalities. Here is a list of documents required for partnership firm registration in India:

• Partnership Deed
• Address Proof
• Identity Proof of Partners
• Passport-sizes Photographs
• Address Proof of Partners
• Registration Certificate (If Applicable)
• Bank Account Proof
• Specimen Signature
• Partnership Firm's PAN Card
• GST Registration (If Applicable)
• Power of Attorney
• Consent/NOC from Property Owner
• Affidavit

Duties of Partners In Partnership Registration

Partners in a partnership registration have certain duties and responsibilities to fulfill to ensure the smooth operation and compliance of the partnership. These duties are typically outlined in the partnership deed and are governed by the Indian Partnership Act, 1932.

• Duty of Good Faith:Partners must act in good faith and honesty towards each other and in the best interest of the partnership. They should not engage in activities that could harm the partnership or the interests of other partners.
• Duty to Act with Care and Skill:Partners are expected to exercise reasonable care and skill in carrying out partnership activities. They should bring their expertise and skills to benefit the partnership.
• Duty to Share Profits and Losses:Partners must adhere to the profit-sharing ratio specified in the partnership deed. Similarly, they should also share losses in proportion to their profit-sharing ratio unless otherwise agreed upon.
• Duty of Loyalty:Partners must adhere to the profit-sharing ratio specified in the partnership deed. Similarly, they should also share losses in proportion to their profit-sharing ratio unless otherwise agreed upon.
• Duty to Provide True and Full Information: Partners are required to provide accurate and complete information about the partnership's affairs, including financial statements and other relevant records, to other partners when necessary.
• Duty to Act for the Benefit of the Firm: Partners should conduct partnership business for the benefit of the firm and not for their personal gain at the expense of the partnership.
• Duty to Attend to Partnership Business: Partners must actively participate in the management and operation of the partnership business unless otherwise agreed upon in the partnership deed.
• Duty to Maintain Confidentiality: Partners should maintain the confidentiality of the partnership's business affairs and should not disclose sensitive information to third parties without proper authorization.
• Duty to Account: Partners are required to keep accurate accounts and records of the partnership's financial transactions and make these records available for inspection by other partners.
• Duty to Act in Compliance with the Partnership Deed: Partners must adhere to the terms and conditions specified in the partnership deed. Any amendments to the partnership deed should be made with the consent of all partners.
• Duty to Settle Disputes Amicably: In case of disputes among partners, they should make a genuine effort to resolve the disputes amicably through negotiation or mediation before resorting to legal action.
• Duty to Provide Notice of Change in Partnership: If there is any change in the partnership, such as admission or retirement of partners, it should be communicated to all relevant parties and authorities as required by law.

Relevance of Partnership Firm Registration

FAQS