Starting a business demands a diverse set of skills and talents. That being said, partnership-based startups are the best to begin with. In fact, there’s ample data proving that partnerships can substantially improve business outcomes – from increasing revenue and fostering innovation to creating fresh opportunities.
Coming to the process of registration, you can simply skip it as registering a partnership business in India isn’t mandatory under the Indian Partnership Act (1932). However, we strongly recommend registering due to the plethora of benefits enjoyed by registered businesses.
If you need clarification on the registration process, you’re at the right place! This article gives you a step-by-step guide for you to follow. Read along.
Step 1: Selecting a distinct business name
Ensure that your partnership business name is unique and not already in use by another entity.
You can verify this by visiting the Ministry of Corporate Affairs (MCA) website. Enter your proposed firm’s name in the provided space to check its availability.
Step 2: Drafting the partnership deed
A partnership deed serves as a formal contract, created with the consent of all partners. It outlines the terms and conditions for operating the firm based on the mutual interests and understanding of the partners.
This document, thereby, plays a vital role in the registration process. The deed must be presented in written form and signed by all parties concerned.
The partnership deed should include the following information:
- Name and address of the firm and its partners.
- Capital contributions from each partner.
- Commissions, salaries, or other compensations for the partners.
- Profit and loss sharing ratios among the partners.
- Procedures for partner retirement, death, or firm dissolution.
- Rights, responsibilities, and obligations of the partners.
- Any additional clauses agreed upon by all partners.
This deed forms the cornerstone of your business. To minimise risks, consider having it drafted by professional experts.
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Step 3: Completion of the partnership deed
The execution of the partnership deed involves the signing of the agreement by all parties and witnesses involved. It is crucial to ensure that all parties thoroughly review and understand the contents of the agreement before signing it. Any errors or misunderstandings can lead to disputes in the future.
The prescribed stamp duty, as per the Stamp Act of the respective state, must be paid. The deed can be executed on either non-judicial stamp paper or through franking. Following the payment, the deed needs to be notarised.
Step 4: Document preparation
During the registration of your partnership-based business, the following documents are required:
- Application Form-1
- GST registration certificate in the name of the business
- PAN card in the name of the business
- Current bank account details in the name of the business
- Duly completed specimen of the affidavit
- A certified true copy of the partnership deed
- PAN cards of all partners (as identity proof)
- Aadhaar card, voter ID card, passport, or driving license of all partners
- Rental agreement (if applicable) and utility bill for the registered office. In the case of rental premises, a No Objection Certificate (NOC) from the landlord is also required.
Step 5: Submission of the registration application
The registration process is regulated by the Registrar of Firms (RoF) within the respective state government.
You must submit the application form, duly signed by all partners, along with the aforementioned documents and the required fee to the Registrar’s office.
Step 6: Approval and issuance of registration certificate
The Registrar will review your application and accompanying documents.
Upon satisfaction, the authority will approve the registration and issue the registration certificate, which will be sent to the official email ID of the business.
From the date of registration, your business can enjoy all the benefits of being a registered partnership firm.
