How to register a Partnership Firm in Jaipur, Rajasthan?

A Partnership is one of the most popular form of business entity in India where two or more persons come together to form a business and agree to divide the profits in pre-agreed ratio. A Partnership firm is very easy to form and the compliance requirements are very less in comparison to any other form of business entity.
Partnership creates a relationship between two or more people who agree to set up a business to earn profits and such people are known as “partners” in legal terms. Partnership business is governed under Indian Partnership Act, 1932.

Is it mandatory to register a Partnership Firm in India?

In India, to establish a Partnership firm, its registration is not mandatory. However, it is highly advisable to register your business of partnership to gain access to various legal benefits which only a registered partnership firm is allowed to avail.
Moreover, if the partnership firm is not registered, a partner cannot enforce its rights which are provided under Indian Partnership Act, 1932. Further, if any dispute arises with the third party, the firm will not be able to claim for set off, but the third party will be able to su the Partnership Firm.
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Characteristics of Partnership Firm Registration

• Requirement of minimum two persons
• Duties and responsibilities shared among all the partners of the firm
• Less legal Compliance and formalities
• Easy to establish and less cost involved for registration
• Minor not allowed to become a partner
• Flexibility in decision making power

Documents Requirement for Partnership Registration

Following list of documents are required to be submitted to the Registrar for registration of Partnership Firm in India:

• An application Form for registration of Partnership – Form 1
• A Certified copy of Notarized Partnership Deed on stamp paper
• Specimen of an affidavit
• Original Copy of certified Partnership Deed
• Proof of ownership of office address in case property is owned
• In case the property is on rent, then duly signed rental agreement
• ID Proof and Residence proof of all the partners

Details required in a Partnership Deed

Following details must be considered while drafting a Partnership Deed:

• Complete name and address of the firm
• Name and address of all the partners
• Total amount of capital contributed by each partner
• Profit/loss sharing ratio of each partner
• Rate of interest on capital invested
• Details of any drawings by partners
• Details of any loan provided by partners to firm
• Salaries, commission or any other amount payable to partners
• Rights, duties and obligations of all partners
• Details of process to be followed in case of death or retirement of any of the partner
• Other clauses as mutually decided

After drafting a partnership deed, it must be duly stamped and notarized.
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Procedure of registration of the Partnership Firm

The following is the step by step process for registration of Partnership Firm in India:

Step 1: Selecting a unique name for your proposed firm: The first step while applying for registration of Partnership Firm is to choose a unique name for your partnership firm. The proposed name must be very unique and must not include words like Emperor, Crown, Empire, empress etc. which indirectly shows some kind of sanction or approval by the government. Moreover, the proposed name must not be similar to an already existing firm which is engaged in the same kind of business.

Step 2: Filing application form with the Registrar: An application has to be filed with the Registrar of Firm of the state in which the office of the firm is situated. Such application needs to be filed in Form 1. The application must be duly signed by all the partners or their agents along with the prescribed fees.

Step 3: Drafting of a Partnership Deed: In the next step, a Partnership deed is created on a stamp paper which should be signed by all the partners. Such partnership deed must then be notarized. It is highly advisable that for drafting a partnership deed, you should consult a professional agent.

Step 4: Submission of all the documents: After filling the application form and drafting of partnership deed, the partners are required to submit them to the Registrar.

Step 5: Verification of the submitted application and documents: Once the application and documents are submitted, it will be closely verified by the Registrar and if no objection is found, then it will issue a Certificate of Registration to the Partnership Firm.

Tax Compliance for Partnership Firm

• Once your partnership is registered, it is mandatory for the partnership form to obtain Permanent Account Number (PAN) and Tax Deduction Number (TAN) from the department of Income Tax.
• A Partnership form is required to file a return of its income, irrespective of the fact that it earn profit or not. Currently, rate of income tax on the total income will be 30% plus surcharge on income tax.
• Partnership Firms having an annual turnover of more than Rs. 100 lakh are compulsorily required to obtain a Tax Audit.

Post Compliances after Partnership Registration

Apart from income tax compliances, there are various other compliances which needs to be done once your firm is registered. They are as follows:

• Opening of Bank Account within 30 days of registration of firm
• Registration for Intellectual Property (optional)
• Drafting of documents relating to policies of the firm
• Printing of stationary like Letterheads, bill heads including the name of the firm.
• GST Registration, in case annual turnover exceed Rs. 40 lakhs

Takeaway

It is quite evident that the partnership firms are comparatively very easy to start and have minimum compliance requirements. Hence, partnership firms comes with a lot of advantages and get extra managerial support. For starting a new business, Partnership Firm is the most popular option.

So, what are you waiting for? Contact Legal Window and get your business registered.