A video conference was conducted by the Gujarat Chief Minister on 29 August 2020, during which he interacted with leading industrialists and corporate investors regarding the New Industrial Policy 2020. As he pointed out, Gujarat is at the forefront of embracing the Prime Minister's vision of Atmanirbhar Bharat to its fullest extent in the state.
A partnership firm is a common type of business structure in India due to its ease of formation and relaxed compliance requirements. The Limited Liability Partnership is a recent addition to the Indian business environment. As a result, most older companies with fewer founders or partners opted for the Partnership Firm registration. While the basic procedure for partnership firm registration stays the same all over India, there might be small changes from one state to another.
In most cases, such changes come in the form of varying Partnership firm registration fees and differences in the documents required. To help young entrepreneurs kick start their business journey, in this article, we will look at the partnership firm registration process in Gujarat. Read on to learn more about the registration process of partnership firms in Gujarat and why you should opt for such a structure.
What Is a Partnership Firm?
A partnership firm is a legal entity formed when two or more individuals come together and start a company based on a partnership deed. In such a business structure, all the partners share the profits or losses incurred by the business as per a preset ratio. The registration of partnership firms comes under Section 4 of the Indian Partnership Act. However, this Act also makes it clear that the registration of partnership firms is not mandatory in India. To function as a partnership firm, the partners must register a Partnership Deed but have the option to leave their company unregistered, though that is not advised. The registration of partnership firms may be done by approaching the Registrar of Firms.
Importance of the Partnership Deed
The partnership deed is the soul of the partnership firm as it lays down all the procedures and rules related to the operation of the firm. Furthermore, partners must register the deed to ensure they enjoy a separate legal status.
The partnership deed holds information pertaining to the rights, duties, responsibilities and profit-sharing ratio of partners while also addressing the nature and type of business undertaken. Furthermore, the deed also helps prevent disputes and misunderstandings later on, as it clearly defines the role of individual partners.
Here’s a quick look at the details that every partnership deed must contain;
- Name and registered office address of the partnership firm
- Details regarding all the partners in the firm
- Duration of Partnership
- Nature and type of business conducted
- Capital contribution of each partner
- Profit-sharing ratio
- Date of commencement
- Salary and commission of each partner
- Roles and responsibilities of each partner
- Interest in the capital of each partner’s contribution
- Allocation of duties
- Procedure to add and remove partners
- The process to follow in case a former partner retires or passes away
How to Choose A Partnership Name?
Partners have the freedom to choose a unique and relevant name for their business. This is usually the first step in registering a partnership firm in India. While partners can choose any name, they deem fit, certain conditions must be kept in mind.
The partners must ensure that their chosen name does not infringe on any copyrights or trademarks registered earlier. Also, soon after deciding on a name, the partners must trademark it to avoid third parties from using the same name. Here’s a quick look at what you need to remember before choosing a name for your partnership firm.
- The name should not be identical or copied from an existing company’s name
- It should not be similar to the name or tagline of any existing firm
- The name must not contain words like Crown, Empress, Emperor or Royalty-the name
- must not include terms that signify that a government or royal house is backing or endorsing the partnership
Documents Required to Register a Partnership Firm in Gujarat
- Application for Partnership Registration via Form No. 1.
- Affidavit indicating consent of partners.
- Notarized and registered Partnership Deed signed by all partners
- Two Passport size photographs
- ID and Address proof of all partners
- Aadhaar Card
- Proof of address of registered office via
- Sale Deed
- Rental agreement
- Latest phone/electricity/water/gas bills/tax receipt
- NOC from the owner
- Acknowledgement slip concerning the fee payment
Registration of Partnership Firm in Gujarat
Here is a quick look at the steps you need to take to register a Partnership Firm in Gujarat:
- Choose a suitable name for the firm, ensuring it complies with the above laws.
- Make sure you have all the required supporting documents.
- Draft a partnership deed on a stamp paper worth at least INR 500.
- Duly fill out the application form for partnership firms in Gujarat registration called Form -1.
- Attach the attested supporting documents as mentioned above to this application form.
- All the partners must then sign the application form and submit it to the RoF of Gujarat.
- On successful verification, the partners will receive a Certificate of Registration from the registrar within a week or so.
However, the partners should remember that registering partnership firms with the RoF is different from registering for tax. To file IT returns correctly, the partnership firm must register with the IT department and obtain a PAN card. Once they receive the PAN, they must open a Current Account and make all business transactions through this account.
Steps for registration
- To register for tax purposes, the partners must visit the website: https://www.incometax.gov.in/iec/foportal/
- Moreover, click on the Registrar of Firms option from the main menu.
- Provide all the details requested, such as PAN number, firm name, area, registered mobile number and email ID.
- Next, fill out Form – A and upload the application form along with the required supporting documents.
- Further, the dealers will also have to pay the registration fee, which amounts to ₹30, to complete the procedure.
- Once successful registration, you will receive an acknowledgement number you can use for future reference.
Advantages of Registering as a Partnership Firm in Gujarat
- Partnership firm registration is an easy process that does not include too many formalities and legal hassles.
- Founders get to start business proceedings as soon as the Partnership deed is registered.
- A Partnership Firm does not have to get its financial reports audited unless the turnover exceeds a certain amount.
- Partnership firms have very few compliance requirements, making them easy to operate and manage.
- Additionally, they are easy to wind up and shut down as all it takes is a dissolution deed.
- Since a partnership firm has more founders than a sole proprietorship, they have access to more resources.
- Since the partnership deed clearly defines the roles and responsibilities of each partner, such firms are easier to manage and run.
- Additionally, every partner bears liability helping share the risk and burden and protect personal assets.
- Moreover, it helps to make the firm more credible and trustworthy.
- Allows partners to borrow money and own property in the partnership’s name
Conclusion
Please contact us by filling out our online form. We will get in touch with you as soon as possible. We will provide you with a first draft of the agreement within four working days. We can do up to two rounds of iterations for free if necessary.
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