Partnership Firm Registration

A partnership is a type of firm that is brought into existence by virtue of a deed known as a Partnership Deed. In essence, a Deed is an agreement between the Partners on the entire business of the partnership. For example, the Deed will contain details of the Partners, the nature of business, the premises that will be the office, the total capital of the firm, the contribution of each partner, each Partner’s share in the profits and losses incurred by the firm, details of the Partner who shall manage the affairs of the firm, operate the bank accounts, etc., the manner of retirement of a Partner, the manner in which new Partners can be inducted into the business, etc.

By law, a Partnership is governed by the Indian Partnership Act, 1932, which provides for matters not provided in the Partnership Deed.

The minimum number of Partners in a partnership is two, and ideally, the Deed should be registered at the Sub-Registrar’s Office, within whose jurisdiction the office of the firm lies. Further, every partnership deed must be printed on Stamp paper, that is, the stamp duty must be paid on the Deed. The exact amount of the stamp duty would depend on the location of the firm, and can be found in the Schedule to the relevant Stamp Act.


One of the primary advantages of a partnership firm is that it can be executed fairly quickly and the process is simple. As soon as the Deed is executed, you can apply for a PAN card for the firm, using which you may open the bank account.

However, if a Partner of an unregistered Firm wishes to file a suit / case relating to the Partnership Firm, the Deed must first be registered before any action can be taken in reliance of the contents of the Deed.

Disadvantages The most obvious disadvantage of a Partnership is the unlimited liability of the Partner. To provide an example:

A partnership firm as A and B as partners, who have invested 10,000/- in total. In the course of business, they incur a debt of 12,000/-. In this scenario, A and B would lose their total investment and would then have to incur additional personal liability, i.e. the additional 2000 would have to come from their personal sources.

Further, continuing the same example, in case B goes and does some act, A, as the other Partner, shall be responsible for B’s actions, to the extent B’s action was done in pursuance of the business of the partnership.

Procedure for Partnership Firm
  • Prepare and execute a Partnership Deed on Stamp Paper.
  • Apply for PAN card of the firm.
  • Apply for the relevant tax license and business registration.

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