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Learn the process to register a partnership firm. This business structure involves two or more individuals managing and operating a business based on a Partnership Deed. Understand the steps to set up a partnership firm, its advantages, and why it's popular among small and medium-sized businesses in the unorganized sectors.
5 May 2024
Afinthrive Advisory
A partnership firm in India can be formed by drafting and registering a partnership deed, which outlines the terms and conditions of the partnership, including the names and addresses of the partners, their contributions, profit-sharing ratios, rights, and duties, et
While registration is not mandatory for partnership firms, it is advisable to register with the Registrar of Firms to avail certain legal benefits and protection.
Contents of Partnership Deed :
Characteristics :
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Follow these key steps to legally set up your partnership firm in India:
Choose a distinctive name that’s not already in use or trademarked. A strong brand starts with a unique identity!
Pick a Unique Firm Name
Draft a detailed deed covering partner details, roles, capital, profit-sharing, and exit clauses—this document defines how your firm operates.
Create the Partnership Deed
Print the deed on appropriate stamp paper and get it signed by all partners in front of a notary. This ensures legal authenticity.
Notarize the Deed
Get a PAN for tax filing and a TAN if your firm will deduct TDS. Both are essential for compliance and banking.
Apply for PAN & TAN
While optional, registration offers legal backing. Submit your application with the required documents and fees to the Registrar of Firms.
Register with the Registrar of Firms
Use your registration documents to open a current account in your firm's name to manage business transactions smoothly.
Open a Business Bank Account
If your firm’s turnover crosses the GST threshold, apply for GST registration to stay compliant and claim input tax credit.
Get GST Registered (if needed)
Depending on your business type, apply for necessary trade licenses, FSSAI, or any sector-specific approvals.
Obtain Licenses & Permits
File your firm’s income tax returns annually and meet all tax deadlines to avoid penalties.
Stay Tax Compliant
Keep books of accounts, bills, and financial statements well-organized for audits, tax filings, and business decisions.
Maintain Proper Records
There are some compliance to be done.
This registration is mandatory for Private Limited Companies engaging in taxable supplies of goods or services within 30 days of incorporation. Once registered, the company must collect GST on its sales, file regular tax returns, and comply with GST regulations, helping to ensure legal compliance and seamless business operations.
Filing GST returns involves submitting periodic reports to the tax authorities detailing its sales, purchases, and tax liabilities. These returns typically include: [detailed information can be inserted here].
Accounting for a Private Limited Company is mandatory and involves several key steps and considerations to accurately record financial transactions, ensure compliance with regulatory requirements, and provide stakeholders with meaningful financial information.
A statutory audit of a Private Limited Company is a mandatory examination of its financial records, conducted by an independent auditor to ensure compliance with statutory requirements and financial reporting standards irrespective of its turnover. The Board of Directors must appoint an Auditor within 30 days of incorporation and thereafter conduct an audit of its financial statements each financial year.
The requirement for an income tax audit of a Private Limited Company typically arises when the company’s annual turnover or profits exceed certain thresholds specified by tax authorities. - Turnover Threshold: If the company’s total turnover from business exceeds INR 1 crore (for the financial year 2021-22, subject to change as per amendments). - Profit Threshold: If the company’s net profit before tax exceeds 8% of its turnover or INR 6 crores, whichever is higher.
Filing with the Registrar of Companies (ROC) is a mandatory compliance requirement for Private Limited Companies. Forms like AOC-04, MGT 7/7A are required to be submitted compulsorily by the company along with other forms which are filed on meeting certain criteria. Ensuring timely and accurate filing with the ROC is essential for maintaining compliance with regulatory requirements and avoiding penalties or legal liabilities.
Trademark registration is a crucial step for protecting a company’s brand identity and intellectual property. While not legally mandatory, it offers significant advantages and protections. Registering a Private Limited Company with a name does not provide complete protection to the name or brand name. Ultimate protection is secured only by Trademark Registration, which grants ownership of the company name, brand name, logo, etc.
If a Private Limited Company wishes to engage in import or export activities, it is mandatory to obtain an IEC code. The code is a mandatory requirement for customs clearance for goods entering or leaving the country.
The company must maintain statutory registers such as the Register of Members (shareholders), Register of Directors, Register of Charges, etc., and keep them updated.
Here is the check list of documents required.
Get Answers to your most asked questions.
A partnership firm is a business structure where two or more individuals (partners) agree to carry on a business together and share its profits and losses as per the terms of a partnership deed.
In a sole proprietorship, the business is owned and operated by a single individual, who is personally liable for all debts and obligations. In contrast, a partnership firm involves two or more individuals who share ownership, liabilities, and responsibilities.
Key features of a partnership firm include: Agreement between partners (partnership deed), Two or more partners, Sharing of profits and losses, Unlimited liability of partners, Mutual agency relationship among partners.
No, registration of a partnership firm is optional. However, it is advisable to register with the Registrar of Firms to avail certain legal benefits and protection.
A partnership deed is a written agreement that outlines the terms and conditions of the partnership, including the names and addresses of partners, profit-sharing ratios, capital contributions, rights, and responsibilities.
Profits and losses in a partnership firm are typically shared among partners as per the terms of the partnership deed. The profit-sharing ratio may be equal or based on the capital contributions or other agreed-upon criteria.
Partners in a partnership firm have unlimited liability, meaning they are personally liable for the debts and obligations of the firm. Creditors can claim against the personal assets of the partners to settle the firm’s debts.
Yes, a partnership firm can have multiple offices as per its business requirements. Each office may have its own address and operations.
Decisions in a partnership firm are typically made by mutual agreement among the partners. In some cases, the partnership deed may specify procedures for decision-making, such as voting rights or the appointment of a managing partner.
Yes, a partnership firm can be converted into another type of business structure, such as a company, LLP (Limited Liability Partnership), or sole proprietorship, subject to compliance with the relevant legal requirements and procedures.
