Partnership
A Partnership Firm is a popular business structure where two or more individuals come together to run a business and share profits as per a mutually agreed agreement called a Partnership Deed.
It is easy to start, cost-effective, and ideal for small and medium-sized businesses that require the flexibility of operations with shared responsibilities. Although registration of a Partnership Firm is optional, a registered firm enjoys greater legal recognition and benefits, including the ability to file suits against third parties.
Key Features
- Minimum Two Partners: A Partnership Firm requires at least two partners to start, with a maximum limit of 20 partners (or 10 in banking businesses).
- Mutual Agreement through Partnership Deed: The rights, duties, and obligations of each partner are defined through a legally binding Partnership Deed.
- Shared Responsibilities and Profits: Profits and liabilities are shared between partners as agreed in the Partnership Deed.
- No Mandatory Registration: Registration is optional but highly recommended for better legal protection and credibility.
- Unlimited Liability: Partners have unlimited liability, meaning their personal assets can be used to settle business debts if required.
- Simple Taxation: Partnership Firms are taxed separately under the Income Tax Act, 1961, and are liable to pay tax on their profits.
Our Process
Draft the Partnership Deed
Create a comprehensive Partnership Deed mentioning business activities, profit-sharing ratios, partner roles, capital contribution, dispute resolution clauses, and other important terms.
Notarize the Partnership Deed
Get the deed notarized to make it a valid legal document. Stamp duty may be applicable based on the state laws.
Apply for PAN Card in Firm's Name
If the firm will file taxes separately, apply for a PAN card in the name of the firm.
Register with Registrar of Firms (optional)
File Form 1 along with the notarized deed and required documents to the Registrar of Firms in your state to obtain a Certificate of Registration.
Obtain Other Registrations
Apply for GST registration, Shop and Establishment License, and other local registrations based on your business activity.
Open a Current Bank Account
Open a current account in the firm's name using the Partnership Deed and firm PAN card.
Documents Required
To make it easier, we have listed all the documents required for Partnership registration.
- PAN Card for all the partners
- Aadhaar Card for all the partners
- Passport-size Photograph of all the partners
- Address Proof (Bank Statement/Electricity Bill/Telephone Bill — recent)
- Partnership Deed (signed & notarized)
- Proof of Business Address (Electricity Bill/Water Bill/Property Tax Receipt)
- Rent Agreement (if rented premises) + No Objection Certificate (NOC) from landlord
FAQs
A Partnership Firm is a business structure where two or more individuals come together to operate a business and share profits according to a Partnership Deed.
No, registration of a Partnership Firm is not mandatory. However, a registered firm enjoys additional legal benefits, such as the ability to sue other firms or partners for enforcement of rights.
A Partnership Firm requires a minimum of two partners and can have up to 20 partners in general businesses (or 10 for banking businesses).
A Partnership Deed is a written agreement between the partners that outlines the rights, duties, profit-sharing ratio, and other obligations of the partners.
Yes, a company or another partnership firm can become a partner in a Partnership Firm subject to the terms of the Partnership Deed.
No, there is no minimum capital requirement to start a Partnership Firm. The capital contribution can be decided mutually by the partners.
GST registration is required if the firm's turnover crosses the prescribed threshold limit (₹40 lakhs for goods and ₹20 lakhs for services) or if it is involved in interstate supply.
A Partnership Firm must file an income tax return annually. Other compliances such as GST returns, TDS returns, and labor law compliances may apply based on the business activities and employee strength.
Yes, a Partnership Firm can be converted into a Limited Liability Partnership (LLP) or a Private Limited Company by following the prescribed legal process.
Registered Partnership Firms have better legal standing, can file suits against third parties, enjoy credibility among banks and customers, and protect the rights of partners.
Centura Square IT Park,
SG Barve Rd, Wagle Industrial Estate, Thane West,
Thane, Maharashtra, India - 400604
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