What is a Partnership Firm?

A Partnership Firm is when two or more people agree to share the profits and losses of a business they run together. In India, there’s a law called the Indian Partnership Registration Act of 1932 that governs how partnerships are registered.

To make a Partnership Firm official, you need to create a legal document called a “partnership deed.” This document outlines how the profits and losses will be shared among the partners.

Legally, a partnership is an agreement between individuals who agree to share the money the business makes. A partnership can have up to 50 members, but there are some rules. People from a Hindu Undivided Family or Burmese Buddhists can’t be part of a partnership firm. You can learn more about the rules and regulations for Partnership Firms in the Partnership Act of 1932.

Types of Partnership Firm In India

1. General Partnership: Partners share equal rights and unlimited liability for the business’s debts.
2. Limited Partnership: Involves general partners with unlimited liability and limited partners with liability only up to their investment.
3. Partnership at Will: Formed without a fixed time limit; partners can join or leave as they wish.
4. Limited Liability Partnership (LLP): Partners’ liability is limited to their contribution, and the firm has a separate legal identity.

Application Requirements for Partnership Firm Registration

• Choose a Name: Pick a unique name for your partnership firm that follows the rules. Avoid names related to the government or other prohibited names.
• Decide Terms: Partners need to agree on how they’ll share profits, the firm’s address, investments, duties, responsibilities, and how new partners can join or old ones can leave.
• Create a Partnership Deed: Get a professional to help you create a legal document called a partnership deed. This involves buying the right stamp paper, printing the deed, getting all partners’ signatures, and applying for registration.
• Submit an Application: Send your registration application with the required fees to the Registrar of Firms in your state. The application must be signed by all partners or their representatives.

Documents Needed to Register a Partnership Firm

• Photos, Aadhar cards, and PAN cards of all the partners.
• The address where your firm will be located.
• A form called “Form No. 1” for registration under the Partnership Act.
• The original partnership deed, which is a legal document, signed by all the partners.
• An affidavit, which is a statement declaring your intention to become a partner in the firm.