Partnership Firm and How to Register It

Last Updated at: Jul 06, 2021
BCCI announces CRED as the official partner of IPL for consecutive three years. CRED is a credit card bill payment platform based in Bangalore.


Many partners of larger professional services firms like Deloitte, PwC, EY and KPMG, and magic circle law firms are experiencing for the first time the downside and risk that comes along with the ‘partner’ tag. Like in one of the big four firms, partners were told that their bonuses —often 20% to 40% of annual salaries—will be added to the working capital of the firm and they will be given 7% interest on that amount.


Partnership firms in India are governed by the Partnership Act, 1932. Section 4 of the Act defines Partnership as – “An agreement between persons who have agreed to share profits of the business carried on by all or any one of them acting for all.”


A partnership, in simple terms, is an agreement with two or more individuals or parties to work together for a common goal. So, a partnership firm is an organization that comprises at least two people that come together to conduct business on the decided terms. The terms and conditions of such firms are outlined in an agreement termed as a partnership deed.

Before going into the details of how to register a partnership firm, let’s discuss what type of businesses can register as a partnership.

Click here to know about Partnership Deed Format.

What Type of Businesses Should Register as a Partnership Firm?

Small businesses usually have a sole proprietorship, which is ideal when one person can easily handle the business needs. But as the business grows and demands more than one skill set, a sales, and a management person, for example, small enterprises turn towards the partnership form of doing business.

Partnership firms are ideal for:

    1. Family businesses that have siblings, husband, and wife, parents and children, or cousins working as partners.
    2. Businesses that require a different skill set, managerial talent, and expertise like legal firms, construction firms, etc.
    3. Businesses that want to avoid the several complex compliance requirements for flexibility of operations.
    4. Businesses like small manufacturing units, wholesale and retail trade, etc. that have a medium capital requirement.

Register Your Firm

What is a Partnership Deed?

An agreement that defines that terms and conditions among the various parties involved in a partnership is termed as a partnership deed. The partnership deed format covers the following details:

  1. Business that is being or to be undertaken by the firm
  2. The Duration for which the partnership is being made, for example, a limited period, say 5-10 years, or a specific project
  3. Details about the partners, like their names and addresses
  4. The name of the partnership
  5. The date from when the firm commenced its operations
  6. Investments made by each partner of the firm
  7. The ratio of profit and loss that is to be shared among the partners
  8. The rules and regulations pertaining to the removal or intake of partners
  9. Obligations and duties of the partners involved
  10. The type of partnership

How to Register a Partnership Firm?

The registration of a partnership is not compulsory but is advisable because you cannot bring any case related to it in the court without registration. The procedure for partnership registration is fairly simple:

  1. Application in Form A for the registration of the partnership to the Registrar of Firms along with the following
  2. Duly signed/certified copy of the partnership deed
  3. Necessary stamp duties and fees
  4. After the registrar’s approval, a certificate of incorporation is issued and the firm is added into the records

You can consult your chartered accountant or hire a lawyer to proceed with the registration of your partnership firm or can for the partnership firm registration online. Companies like VakilSearch specialize in services like partnership registration also offer the necessary basic legal advice with the help of their team of advocates and legal experts.

A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.