Partnership firm registration is required when two or more parties sign a formal agreement to manage and operate a business and share both the profits and losses.

Registering a Partnership is the right choice for small enterprises as the formation is straightforward and there are minimal regulatory compliances.

A partnership is one of the oldest business structures in India and is governed by the Indian Partnership Act, 1932. A partnership firm does not have an independent status apart from the partners constituting it. A partnership is not a legal entity; it has a limited identity for the purpose of tax laws. Any two people who are capable of entering into a contract can start a partnership business under an agreement called a partnership deed. The partnership agreement can be oral or written. It is not mandatory to register a partnership deed, but it is advisable to do so for evidential purposes since a firm cannot file a suit against a third party if it is unregistered.

Key Registrations required for a partnership are similar to that of a proprietorship except for registration of the partnership agreement and a separate PAN for the firm. MSME, TAN, GST, Import-export code, FSSAI registration (Only if the partnership is involved in the selling or handling of food products), Shop and Establishment Registration, and Trademark.

Benefits of Partnership Firm:

  1. Easy to start: Partnership firms are more comfortable to set up, and the only requirement in most cases is a Partnership deed.
  • Decision making: In a Partnership firm, decision-making is faster as there is no concept such as passing the resolution. The Partners of Partnership firms in India enjoy a range of powers as they can undertake any business on behalf of the Partner’s consent.
  • Raising of Funds: A Partnership firm can quickly raise funds as compared to a Proprietorship firm. Even the banks find Partnerships more favourable while sanctioning credit facilities in comparison to a Proprietorship firm.
  • Sense of Ownership: As every Partner is the owner, the partners have the liberty to manage and control the firm’s activities. The tasks might be varied, but people in a Partnership firm are together for a common cause. Ownership creates a higher sense of accountability and belongingness, which helps in creating a diligent workforce.