Wednesday, July 10

Why Should a Partnership Firm be Registered?

Partnership registration becomes common if you begin a business with other persons as partners. The partnership deed is vital for new ventures. Let us take a look at the procedure and needs for partnership deed along with certain benefits.

How to register a partnership deed

  1. Create a partnership agreement.
  2. Notarize the partnership agreement that has been drafted
  3. The Registrar of Firms must verify the agreement
  4. Pay the required filing fee 


A Partnership Firm is registered under the local Registrar of Firm (RoF). The format may change from state to state. Therefore, let us see the common format of the agreement(online):

  1. A Drafting of Partnership Deed must be drafted under the Indian Partnership Act, 1932. 
  2. After the deed being verified by the professionals, the deed shall be duly executed by payment of stamp duty as applicable for the concerned State and notarization of the same. 
  3. Later, the deed is executed either by non-judicial stamp paper or by way of franking. Franking is simply but a process of payment of stamp duty through banking channels and it is equivalent to stamp paper. 
  4. Application for PAN can be made before itself. The application of PAN Allotment shall be supported by a copy of the Partnership Deed.
  5. The registration application of the partnership firm must contain the name of the firm, name of the Partners and their addresses, place of Business, duration or time of Business, etc. 

Documents required:


  • PAN card
  • Address proof 

Documents of Firm:

  • PAN card
  • Address Proof of firm

Additional Documents in case of Registration:

  • Partnership deed (certified)
  • ID proofs and address proofs of the firm and the partners to the Registrar of Partnerships. 
  • An affidavit 
  • Application for registration of partnership
  • NOC
  • Any documents needed by the registrar

Let’s now see why the partnership firm has to be registered. 

Advantages of having a partnership agreement:

The following are the advantages of registering a partnership deed:

  1. Formation is easy
  2. Specialization is great
  3. Flexibility
  4. Minimum legal restrictions
  5. Protection to partner’s interests
  6. Balanced decisions
  7. Sharing of risks
  8. Credit-worthiness
  9. An incoming partner can impose his/her right against the remaining partners rather than relying on the honesty of co-partners.
  10. A partner is permitted to ask for the dissolution of the firm or the accounts of the firm dissolved.
  11. The registered firm is allowed to claim for its tax benefits under the provisions of Income Tax Acts.
  12. The power to file the case in a Court by a partner against the firm or other co-partners
  13. The power to file the case in Court by the firm against 3rd parties
  14. The power to claim set-off

Types of partners in a partnership firm:

There are 7 types of partners in a partnership firm. They are as follow: 

  • Working partner
  • Dormant partner or sleeping partner
  • Nominal partner
  • Partner by estoppel
  • Limited partner
  • Secret partner
  • Partner by holding out
  • Sub-partner
  • Partner in profit

Important clauses in a partnership deed:

A partnership deed may contain the following significant clauses:

  • Firm’s name
  • Business nature
  • Aim of the business firm
  • Partnership duration
  • The date on which the patterns joined the firm
  • Names and addresses of the patterns
  • Amount of capital invested by the partners
  • Amount withdrawn by the partners
  • Acceptance of liabilities
  • Profit-sharing ratio
  • Admission and retirement procedure
  • Salary amount paid to the partners
  • Allocation of work among partners.
  • Mode of valuation of goodwill.
  • A procedure that will be followed in case of dissolution of the firm

GST Registration:

To acquire a GST registration, the firm will need to submit PAN number, address proof, and identity & address proofs of the partner. Next, an authorized signatory will sign the application using a digital signature certificate or e-Aadhaar verification.

Current Bank Account:

For opening a current bank account, a firm will need to submit the following documents:

  1. Partnership deed
  2. Partnership firm PAN card
  3. Address Proof of the partnership firm
  4. Identity proofs of all the partners
  5. Partnership registration certificate 
  6. GST certificate (or any registration certificate issued by the state or central government)
  7. Copy of electricity bill, telephone bill, or water bill (for 3 months)
  8. An authorization letter must be produced on the letterhead of the firm authorizing a partner as authorized signatory for the bank account.

If the registrar is satisfied with the documents, he will register the firm in the Register of Firms and issue a Certificate of Registration.


The following are the disadvantages faced because of registering a partnership deed.

  1. Co-operation is not satisfactory
  2. Limited capital amount
  3. Public confidence may be lacking
  4. Stability may be imbalanced
  5. Organizing sources are limited


  • What is a Partnership Firm?

An organization of two or more persons managed by any one or all of them to lead a business and share the profits is called a partnership firm.

  • What is the duration of registering a partnership?

In India, the partnership firm can take up to 12-14 days.

  • Are there any reasons stating which partnership can be invalid?

The court may make a partnership invalid if the partnership agreement is not registered.

If the aim of the business is not proper, the court may consider the partnership invalid.

  • Will a certificate be provided?

Yes, an acknowledgment will be given in Form-C

  • Is notary compulsory for partnership deeds?

Yes, it is necessary to notaries a partnership deed.

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