Requirements for conversion

A partnership firm is a type of business structure that is formed with the mutual decision of two or more people who agree to share all the profits and shares of the firm.

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These types of firms are registered under the Indian Partnership Act. Indian Partnership Act, 1932 defines partnership as “the relations between persons who have agreed to share profits/losses of the business carried on by all or any of them acting for all”.

Advantages of forming a partnership

  • Enables to pool resources and skills
  • Minimum compliance requirements
  • Easy to establish
  • Relatively inexpensive

Partnership Firm Registration

The registration of a partnership firm is not compulsory. But it is advisable to register, since the following rights are denied to an unregistered firm:

  • Filing a suit by a partner against the firm or other partners
  • Filing a suit by firm against third party
  • Firm or partners claiming setting off debts or other proceedings in a dispute with third party

Documents Required

  • Statement in Form 1 with the prescribed fees
  • Notarised True copy of the Partnership Deed stating the following:
  • The firm-name
  • The nature of business of the firm
  • The place or principal place of business of the firm
  • The names of any other places where the firm carries on business
  • The date when each partner joined the firm
  • The names in full and permanent addresses of the partners
  • The duration of the firm
  • Proof of ownership or rent/lease & NOC for the location of your business (e.g., Electricity Bill/ Water Bill or Rent/Lease/Leave and Licence Agreement of Business Place)
  • Copy of PAN Card of partners
  • Copy of Aadhaar Card/ Voter identity card of partners

Registration Procedure

Step 1: Application for Registration

An application form (Form-1) has to be filed to the Registrar of Firms of the State in which the firm is situated along with prescribed fees. The registration application has to be signed and verified by all the partners or their agents. The application can be sent to the Registrar of Firms through post or by physical delivery.

Step 2: Selection of Name of the Partnership Firm

Any name can be given to a partnership firm. But certain conditions need to be followed while selecting the name:

  • The name should not be too similar or identical to an existing firm doing the same business.
  • The name should not contain words like emperor, crown, empress, empire or any other words which show sanction or approval of the government.

Step 3: Certificate of Registration

If the Registrar is satisfied with the registration application and the documents, he will register the firm in the Register of Firms and issue the Registration Certificate. The Register of Firms contains up-to-date information on all firms, and anybody can view it upon payment of certain fees.