Should You Start a Partnership Firm in India?

Should You Start a Partnership Firm in India?

Partnership firm

A Partnership firm is a type of business entity wherein the partners involved agreed to share the profits and losses incurred by the business in a predetermined manner. Additionally, partnership firm registration serves as the right choice for small and medium-sized business enterprises. Further, partnership firm registration in Delhi is popular due to its ease of formation and the minimal compliance it requires. Moreover, partnership firm registration falls under the purview of the Partnership Act, 1932 and its amendments. As per the Act, there are two types of partnership firms in India;

  • Registered Partnerships 
  • Unregistered Partnerships

Since the only criteria to function as a Partnership firm in India is the execution of the partnership deed, owners have the option not to register their business. However, this is highly dangerous and ill-advised as they do not have certain rights, as mentioned in Section 69 of the Act.

Disadvantages of Unregistered Partnership Firms

  1. Partners cannot file a lawsuit against other partners
  2. Cannot file lawsuits to enforce a contractual or conferred right 
  3. Moreover, it cannot file suits to enforce a right set by another court of law
  4. Partners cannot file suits on behalf of a third-party
  5. Cannot claim set-off in case there is a dispute with an external party

Partnership Firm Registration Fees

While there are no statutory fees to register a partnership firm in Delhi, you will need to pay professional fees and stamp duty for the following;

  1. Affidavit on an INR 10 stamp paper indicating their consent to enter into a partnership deed
  2. Likewise, court Fee stamp worth INR 3 on the application form
  3. Stamp duty of the paper on which the Partnership Deed is drafted, which may vary between 1% of the capital and INR 5000.
  4. Similarly, registration and documentation fee to register the deed which depends on current state laws, but in most cases, it costs around INR 1000.
  5. Further, professional fees are charged by the legal consultant to draft your legal documents.

Documents Required Partnership Firm Registration in Delhi

  1. Duly filled Form 1 with an INR 3 stamp on it
  2. Attested Identity and Address proof of Partners – PAN/Passport/Driving License/Aadhaar/Voter’s ID
  3. A true copy of the Partnership deed 
  4. Attested Proof of address of the registered office – Sale Deed/Lease Agreement/Latest electricity/gas/water/telephone bill/tax receipt
  5. Additionally, NOC from the owner in the prescribed format on an INR 10 non-judicial stamp paper

Any of the following individuals must attest all the documents;

  1. Magistrate 1st class
  2. Gazetted Officer
  3. Notary Public
  4. Advocate 
  5. Chartered Accountant 

How to register a partnership firm in Delhi

  1. First and foremost, the members should decide on a name and ensure that it is available and abides by the laws.
  2. Next, the members should work together to get all the required documents, notarized and attested.
  3. Moreover, an integral part of registering a partnership firm in Delhi is drafting and notarizing the Partnership deed.
  4. An experienced lawyer will help you draft a partnership deed, that must contain the following details;
  • Name and address of the Partnership Firm.
  • Name and address of all the Partners.
  • Nature of business and date of commencement of activities
  • Partnership duration
  • Profit-sharing ratio 
  • Capital contributions ratio
  • Applicability of the Indian Partnership Act, 1932.
  1. The attested copy of the notarized and registered partnership deed must be copied onto a non-judicial stamp paper. Further, the value of this paper must whichever is lower between 1% of the capital introduced and INR 5000.
  2. Next, the partners must approach the concerned registrar with all the documents listed above.
  3. Additionally, apply for registration and the supporting documents.
  4. On submission, you will receive an application ID, which may be used for future reference. 
  5. Further, after verification, you will receive a Certificate of Registration.
Created & Posted by (Anuj)

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