Partnership Registration

A partnership is a very common form of business organisation. Especially in India, partnership firms are generally finding favour when the business is medium scale. So it is important that we learn about the Partnership deed and the registration of such deeds.

How to register a Partnership firm in India?

Partnership firm registration is required when two or more parties sign a formal agreement to manage and operate a business and share both the profits and losses.

Registering a Partnership is the right choice for small enterprises as the formation is straightforward and there are minimal regulatory compliances. The Partnership Act has been in existence in India since 1932, making partnerships one of the oldest types of business entities in India. A partnership firm can even be registered after it is formed. There are as such no penalties for non Registration of a Partnership firm. But unregistered Partnership firms are denied certain rights under section 69 of the Partnership Act that majorly deals with the effects of non Registration of Partnership firms.

Types of Partnership firm

Depending on the extent of the liability while Partnership firm registration, we can derive the different classes of partners.

Partnership Firms can be classified into two types registered and unregistered Partnership firms. The Indian Partnership Act states that the only criterion to commence the business as a Partnership firm is a finalization and the partnership deed's execution between the Partners.

Under this act, the Partnership firms don't need to be registered. As an outcome of this lot of partnership businesses exist as unregistered partnership firms.

There are no penalties for the nonregistration of the partnership firms. Also, a partnership firm can be registered even after formation. But the unregistered partnership firms have been denied certain rights in Section 69 of the Partnership Act, which deals majorly with the effects of the non-registration of the partnership firm.

Here are the reasons why an individual should opt for a registered partnership firm:

  • A registered firm partner cannot file suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.
  • No suit to enforce a right arising from an agreement can be instituted in any court by or on behalf of a firm against any third party unless the firm is registered under the Partnership Act.
  • An unregistered firm or any of its partners cannot claim set-off or other proceedings in a dispute with a third party.

Therefore, it is better to register a Partnership sooner or later.

What documents are required to register a Partnership Firm In India?

The application for the Partnership registration form must include the prescribed documents like the Identity proof, address proof, a real copy of the Partnership deed entered into and the proof of the Principal place of business.

Any of the following documents can be submitted as identity proof and address proofs.

  • PAN card
  • Passport
  • Driver License
  • Aadhar Card
  • Voters ID

Proof of Business premise can be established by submitting the following documents:

  • Sale Deed in case if the Partner owns the place
  • Rental agreement copy if the office is on rental basis
  • Copy of the latest electricity bill or the tax bill receipt

What are the advantages of Partnership firm Registration?

Partnership firm registration has more advantages than disadvantages. Here, we have mentioned the advantages of Registering a Partnership firm.

  • 1

    Easy to start

    Partnership firms are more comfortable to set up, and the only requirement in most cases is a Partnership deed.

  • 2

    Decision making

    In a Partnership firm, decision-making is faster as there is no concept such as passing the resolution.

    The Partners of Partnership firms in India enjoy a range of powers as they can undertake any business on behalf of the Partner's consent.

  • 3

    Raising of Funds

    A Partnership firm can quickly raise funds as compared to a Proprietorship firm.

    Even the banks find Partnerships more favorable while sanctioning credit facilities in comparison to a Proprietorship firm.

  • 4

    Sense of Ownership

    As every Partner is the owner, the partners have the liberty to manage and control the firm's activities. The tasks might be varied, but people in a Partnership firm are together for a common cause.

    Ownership creates a higher sense of accountability and belongingness, which helps in creating a diligent workforce.

  • 5

    FSSAI registration

    FSSAI registration must be obtained from the Food and Safety and Standard Authority of India in the operator's name if the Proprietorship is involved in the selling or handling of food products.


How many peoples are required to start a partnership firm?

In a Partnership firm, a minimum of 2 members are required and a maximum of 20 partners are allowed.

Who can be a partner in a partnership firm?

An individual who is an Indian citizen and a resident of India can partner in a Partnership firm. Nonresident Indians and Individuals belonging to Indian Origin can invest in a Partnership only with the approval of the Government.

What documents are required to register a Partnership firm?

For the partners, it is necessary to submit a PAN card along with the identity and address proof. It is recommended to draft a Partnership Deed which is to be signed by all the Partners.

How much Capital is required to start a Partnership?

A Partnership firm can be started with any amount of capital. There is no minimum requirement as such.

What are the advantages of Registering a Partnership firm?

It is very advisable to register a Partnership firm as a Registered Partnership Firm can file a suit in any court against any of the Partners or firm for the enforcement of any right arising from the contract referred by the Partnership Act.
Also, only a Registered Partnership Firm can claim set-off or other proceedings in a dispute with a party.

Is a Partnership firm a Separate Legal entity?

The Partnership firm and the partners are the same in the eyes of the law. In Partnership firms, the liability of the Partners is also unlimited and all the Partners are said to be jointly and severally liable for the liabilities of the firm. Hence, No Partnership firm doesn't have separate legal existence of its own.

Is it Compulsory for Partnership to File Income Tax Return?

A Partnership Firm must file the returns of Income irrespective of the number of profits or losses made by the Partners.

Can a person Transfer a Partnership Firm?

There are restrictions on the Transfer of ownership interest in a Partnership Firm. A Partner cannot transfer his or her interest in the firm to any person without the consent of all other partners.

What is Partnership Deed?

A Partnership deed is an agreement between the Partner that highlights the terms and the rules of the Partnership among the Partners.

Why is a Partnership deed necessary?

The Partnership deed lays down all the Terms and Condition of the Partnerships. As it regulates the rights and duties of each partner. A Partnership deed is a very crucial document.

How can I transfer to my Partnership firm?

There are restrictions on the transfer of the Partnership Firm. A Partner cannot transfer his / her interest in the firm to anyone without the consent of all other partners.

Is audit required for a Partnership?

In the case of Partnerships, it is not necessary to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criteria.

Can I convert my Partnership firm into a Company or LLP?

Yes, there's a specified procedure for converting a Partnership firm into a Company or LLP. However, the procedure is very cumbersome and time-consuming. It will be wise if an entrepreneur considers starting an LLP or a Company instead of a Partnership firm.

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 an identity proof and address proof of the Partner is to be provided.

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