According to the India Partnership Act 1932, there is no time limit as such for the registration of a firm. The firm can be registered on the date when it is incorporated or any such date after so. The requisite fees and fines must be paid. The procedure for such a registration is as follows,
Step 1: Choose name for a partnership
A firm should select a name that does not resemble the name or color-able imitation of the entity that is already public.
Step 2: Draft a Partnership Deed
The partnership deed is the most important document for the registration of the company as it provides the registrar with the following necessary information:
Name and address of company and all partners
Contact details of partners
Nature of the business
Duration of the partnership
Profit/Loss sharing ratio
Rules regarding the solvency of the firm
Information of capital to be contributed by each partner
Additionally, the Deed also contains information about the remuneration payable to partners in excess of the profit shares, responsibilities of partners, audit procedures, etc.
Once the deed is ready it shall be reviewed by the partners and if necessary by experts to avoid any technical error. The final Deed shall be printed on a non-judicial stamp paper with a value of 500/- or more depending upon the value of properties that are present in the deed. The parties are thus requested to verify the state stamp duty act of the respective state in which it is registered.
All the partners or their authorised agents have to sign the deed in the presence of the other partners and the witness. It is a customary practice that every partner retains a copy of the original signed deed for their reference. Then the signature of the witness is obtained.
The partnership act does not require the deed to be notarized but it is advisable to notarize the deed because it adds more credibility to the deed. Litigations questioning the genuineness of the deed shall be avoided just by notarizing it. It is a mere customary practice of this industry.
In case if there is no partnership deed then the following rules will apply irrespective of the approval or disapproval by partners.
Equally distributed profit and loss.
No salary shall be provided to any partner.
There shall be no interest on capital brought in.
No interest shall be attracted when a drawing is made.
On mutual agreement, the firm shall pay interest of 6% p.a to the partner who has advanced loan.
Step 3: Apply for a PAN Card in the Partnership Name
A firm, irrespective of registration under the Act, has to apply for a Permanent Account Number to the Income Tax Department. The PAN is a requirement to fulfill the obligation of paying taxes.
Step 4: File a Registration Application
The registration application requires a firm to provide information regarding the name of the firm, the nature of the business carried out, address of the business, names and addresses of all the partners, date of commencement of business. This form is further taken to the registrar in the region of the firms main office.
Step 5: Submit the Documents
Along with the registration application, the documents are to be submitted to the Registrar as a part of the registration process:
Step 6: Pay the Fees & Stamp duties
A registration fee and a stamp duty need to be paid at the time of the submission of the documents with the Registrar. The fees vary across states. One must understand that the registration is not complete until all dues are paid.
Step 7: Finalize the Deed
To legalize the Deed, it should be provided to each partner in a written form on a stamp paper. One stamp paper deed should be duly signed by all the partners in front of the notary. The value of the stamp varies from state-to-state. The signed copy is thereafter submitted to the Registrar during the registration process.
Step 8: Certification from the Registrar
The registrar, after thorough examination of the documents, will issue a registration certificate.
The firm will be thus on record in the Register of Firms . On the date of this entry, the firm shall be deemed to be registered. The partnership firm is required to add (Registered) after its name from the date of registration.
A lot of states in India now provide the facility of registering partnership firms online. The online registration of partnership firm requires the firm to file an application online. The firm will have to furnish the same information on this form. The acknowledgement number raised after the submission of the application is further used to login on the website and the firm has to upload the scanned copies of all the above mentioned documents. The registrar will review the documents and the certificate will be sent through an email.