Home Start Ups Partnership Firm Registration in India – Process, Types, Documents, Benefits
Partnership Firm Registration in India – Process, Types, Documents, Benefits

Partnership Firm Registration in India – Process, Types, Documents, Benefits


Partnership Firm Registration in India – Process, Types, Documents, Benefits

Two or more people when come together with a common idea of business by infusing the sources and funds together with the common goal of earning profit is termed as Partnership. Partnership Firm is one of the common forms of business in India as it does not require stringent procedure to be followed and avails the flexibility in administration to the Partners.
The formation of Partnership Firm shall be with mutual consent of Partners to the business. The firm shall be formed and registered by following the procedure under Indian Partnership Act, 1932.


1. Two or More Persons:

At least two persons must pool resources to start a partnership firm. The Partnership Act, 1932 does not specify any maximum limit on the number of partners. However, the Companies Act, 1956 lays down that any partnership or association of more than 10 persons in case of banking business and 20 persons in other types of business is illegal unless registered as a joint stock company.

2. Agreement:

A partnership comes into being through an agreement be­tween persons who are competent to enter into a contract (e.g. Minors, lunatics, insolvents etc. not eligible). The agreement may be oral, written or implied. It is, however, to put everything in black and white and clear the fog surrounding all knotty issues.

3. Lawful Business:

The partners can take up only legally blessed activities. Any illegal activity carried out by partners does not enjoy the legal sanction.

4. Registration:

Under the Act, registration of a firm is not compulsory. (In most states in India, registration is voluntary). However, if the firm is not registered, certain legal benefits cannot be obtained. The effects of non-registration are- (i) the firm cannot take any action in a court of law against any other parties for settlement of claims and (ii) in case of a dispute among partners, it is not possible to settle the disputes through a court of law.

5. Profit Sharing:

The partnership agreement must specify the manner of sharing profits and losses among partners. A charitable hospital, educational institution run jointly by like-minded persons is not to be viewed as partnership since there is no sharing of profits or losses. However, mere sharing of profits is not a conclusive proof of partnership. In this sense, employees or creditors who share profits cannot be called partners unless there is an agreement between the partners.

Types of Partnership Firm

Broadly classifying the Partnership Firms in India, the basis is the registration and non-registration of the firm, in accordance with the provisions of the Indian Partnership Act, 1932 and its allied rules & regulations. The two types of Partnership Firm are hereby illustrated

Unregistered Partnership Firm:

The Unregistered Partnership Firm is established by entering into agreement by the partners of the proposed firm. The Unregistered Partnership Firm as stated to be legal allows the Partners to carry on the business in manner stated and provided in the agreement.

Registered Partnership Firm:

The Partnership Firm is to be registered with the Registrar of Firm (RoF) having jurisdiction over the Place of Business of the Firm. The registration of Partnership firm involves payment of Government fees to Registrar, varied from state to state according to the State Law.

Process of Partnership Firm Registration

A step-by-step guide to form a partnership firm in India. Partnership business is quite simple to start. It requires fewer compliance and documents compared to the company form.

Step 1: Deciding the partners

After having decided that you will be entering a business with a partnership firm, next is the decision of the number and who all are going to be the partners. Whatever agreement among the partners is made regarding the name and location of the firm, profits, losses, capital share, salaries to be drawn, roles and responsibilities, policies to be followed while choosing vendors and regarding business-related decisions and considerations to be made in case of dissolution of the partnership are done in writing through a Partnership Deed. There is no laid down format for the partnership deed, but it should contain the necessary elements like the ones mentioned afore. It is written on a non-judicial stamp paper of required value, signed by all partners and get notarized. It serves as the Blueprint of the firm.

Step 2: Collection of documents

You will have to upload all the requisite documents on the government portal and for that, you need to keep them handy. Here’s a checklist of all the documents that you’ll be needing for Online Registration of Partnership Firm.

Step 3: Address proof of the firm

It can be a current account detail or any license issued in the name of the firm before starting the business. If the firm is located on rented premises, the rent agreement will have to be attached.

Step 4: Identity proofs of all the partners

These can be Passport, Aadhar card, voter ID, Ration card, Driving license, PAN card.

Step 5: Address proofs of all the partners

These can be Passport, Aadhar card, voter ID, Ration card, electricity bill, postpaid phone or any landline bill. The latest copies of the bills have to be attached.
Attested Partnership Deed duly signed and stamped.
Passport size photographs of all the partners.
Affidavits from all the partners stating that they are entering into this mutual agreement with their will. This is done on a stamp paper of INR 10/-.

Step 6: Visit the government registrar website

Go to the website link of the state in which you are applying for your firm’s registration and submit the application form. Upload all the requisite documents. Pay registration fees. Different states have different slabs. So, the fees vary accordingly but is around INR 1100/-.
After the completion of the procedure, your firm name will be entered in the register and the Registrar will issue your firm a Certificate of Registration.

Documents required to register a Partnership Firm

The Partnership Firm is best suitable for starting any business having small scale of operations and requires flexibility in operations. Also, where the business idea involves higher risk of discontinuation or failure of products, can be started with Partnership Firm, which afterwards can be converted into any other form of business with the stability and growth of the business.

  • Self-attested copy of PAN card of Partners
  • Self-attested copy of Address Proof of Partners
  • Utility Bill as Business Address Proof
  • Rent or lease Agreement of Business Address (if place is rented)
  • NOC from the owner of Business Place (if place is rented)
  • Original Partnership Deed
  • Application form in the prescribed format
  • Any other documents as required by Registrar

Benefits of Partnership Firm Registration

  1. Easy to Start

Partnership firms are one of the easiest to start. The only requirement for starting a partnership firm in most cases is a partnership deed. Hence, a partnership can be started on the same day. On the other hand, an LLP registration would take about 5 to 10 working days, as the digital signatures, DIN, Name Approval and Incorporation must be obtained from the MCA.

  1. Decision Making

Decision making is the crux of any organization. Decision making in a partnership firm could be faster as there is no concept of the passing of resolutions. The partners in a partnership firm enjoy a wide range of powers and in most cases can undertake any transaction on behalf of the partnership firm without the consent of other partners.

  1. Raising of Funds

When compared to a proprietorship firm, a partnership firm can easily raise funds. Multiple partners make for more feasible contribution among the partners. Moreover, banks also view a partnership more favourably while sanctioning credit facilities instead of a proprietorship firm.

  1. Sense of Ownership

Every partner owns and manages the activities of their firm. Their tasks might be varied in nature but people in a partnership firm are united for a common cause. Ownership creates a higher sense of accountability, which paves the way for a diligent workforce.