Overview of Partnership Firm Registration

A partnership firm falls among one of the most essential corporate structures within a business organization. It is a well-known form of business that is very frequently incorporated in India. As per the Indian Partnership Act 1932, there must be at least two members for establishing a partnership firm. Therefore, a partnership firm is a corporate structure where more than two members come together to form a business and gain profit in the pre-decided ratio among the members. For establishing a partnership business, any occupation and profession can be selected. The members incorporating the partnership firm will be known as the partners. The contract by which the partnership business is formed will be known as the partnership deed, and the company will regulate according to the terms and conditions mentioned in the partnership deed. In this write, we will learn about the advantages and the disadvantages of a partnership firm, the importance, and the documents along with the procedure that is required to register a partnership firm.

Requirements of Partnership Firm Registration

There are specific requirements for a partnership firm registration according to the Indian Partnership Act 1932, which are stated as follows:

1. There must be a minimum of two partners to form a partnership firm


2. A partnership deed must be executed between the members, which would contain the name and address of the firm as well as the partners, the nature of the business, the capital contribution of the partners, the profit-sharing ratio of the partners, and the duration of the partnership if it is for a fixed period.


3. The partnership deed must be stamped on a non-judicial stamp paper, and all the partners must attest it.


4. An application for the registration of the partnership firm must be given along with the partnership deed and the registration form.

Objectives of Partnership Firm Registration

There is a specific objective of a partnership firm registration, which provides various kinds of benefits. The goals are as follows:

• The partnership firm registration gives legal recognition to the business and allows the company to operate as a separate legal entity.


• The partnership firm registration gives proof of the business's existence, which is essential in case of a legal dispute with any third-party bank or government authority.


• The notification of the partnership firm in the official gadget allows third parties to notice the existence of the partnership firm and the terms of the business.


• The registered partnership firms are considered more creditworthy by lenders and other Financial Institutions, therefore making it very simple for the business to raise loans.


• In disputes among the partners, the conflict can quickly be resolved, and even the partnership can be dissolved if needed.


• It allows for perpetual succession; therefore, the partnership firm is not affected by the entry and exit of the partners.


• It also provides the ability to file a lawsuit for the business as it operates as a separate legal entity.

Advantages Of Partnership Firm Registration

There are several advantages of a partnership firm as follows:

• It is straightforward to incorporate compared to other forms of business. For incorporation of a partnership firm, only a partnership deed needs to be executed among the members, and no other significant documents are required. It is not necessary to be registered with the Registrar of Companies, and the registration is also voluntary and not compulsory.


• There are fewer compliances in a partnership firm compared to the other forms of business structures. The partners do not need to have a digital signature certificate or any director identification number. The registration process cost of a partnership firm is much less compared to the incorporation of a company or LLP, and the dissolution process is also straightforward. There are no such major legal formalities involved.


• Decision-making within a partnership firm is also rapid, as there is no difference between the ownership and management of a partnership firm. Whatever decisions are taken together by the partners are implemented immediately, and their food day can exercise a range of powers. It can function for the benefit of the partnership firm without going for any vote for approval.


• The share of the profit is also distributed amongst the partners in the ratio that was decided in the partnership deed, also known as the partnership deed ratio, and the partners are liable jointly and severally for every activity of the business.

Disadvantages Of Partnership Firm Registration

There are a few disadvantages of a partnership firm, which we will discuss in this section as follows:

• The partners of a partnership firm have unlimited liability for the business, which means that the partners might have to bear the loss that the business incurs from their assets. The major disadvantage is that the liability of a single partner will have to be taken by all the partners in the partnership deed. If there are not enough business assets to pay off the debts, the partners must pay off the debts by utilizing their assets.


• No perpetual succession is allowed in a partnership firm. That means on the death of a partner or insolvency of the business in which all the partners are liable except one, the partnership firm has to be dissolved. If any other members succeed, the partnership business will continue.


• The capital that is invested in a partnership business is also very restricted because the maximum number of members that can operate in a partnership firm is 20; therefore, the total sum that each partner invests is also much less, which acts towards the restriction of the revenue and therefore partnership firm is not appropriate in case of a business of large scale.


• In a partnership firm, it is not very easy to raise funds like a company or LLP; there are no such legal compliances, and therefore, the lenders need to have more trust in the firm as the firm accounts are not published.

Documents required for Partnership Firm Registration

The documents that are necessary for establishing a partnership firm are stated in the section as follows:

1. The application for the partnership firm must be filled up in the form 1 along with the signature of each of the partners


2. The partnership deed must be provided, and it must be the certified original copy


3. PAN of the proposed directors and all the members.


4. An affidavit must be submitted, which will ensure that all the clauses that are mentioned in the partnership deed and the documents that are attached along with the partnership deed are authentic and original.


5. The PAN card of the partners and the firm


6. The address proof of the partners and the firm


7. The ownership documents for the address proof that was provided, and in case it is a rented or leased property, then the rent or lease agreement has to be provided

Process of Partnership Firm Registration

The partnership firm registration process involves a few steps as follows:

1. The first step is the application in Form 1, which can be obtained from the registrar of the forms office and can even be downloaded online for the registration of the partnership firm along with the prescribed fees. Each of the firm's members must sign the application form.


2. In the application, the name of the firm, the address of the firm, the date of opening of the firm, and the joining date of each of the partners along with their names and addresses of the partners and if the form is for a fixed period, the duration of the business should also be stated.


3. The next step is to select an appropriate name for the partnership firm, and it must be ensured that the name should not be identical or similar to any other business name. Also, the title should not contain any such words which will indicate the approval of the government.


4. Now, suppose the registrar is ensured of the transparency of the application along with the documents. In that case, the registration certificate for the partnership firm will be issued by the firm's register.

Why Adviso?

Partnership Firm Registration involves many requirements, document preparation, and pre- and post-compliance obligations. It is essential to comply with the specific terms of the MCA. The incorporation of a Partnership Firm Registration can be a tedious process without professional support. That is where Adviso comes in.

At Adviso, we provide expert services for Partnership Firm Registration online approval under the Indian Partnership Act 1932. Our Lawyers, CA, and CS experts guide you through every step of the journey to ensure your company lists smoothly and efficiently.

With Adviso's expertise and assistance, you can easily navigate the complexities of Society registration, saving time and ensuring compliance with all necessary regulations.