If you are in the business world you must be aware about partnership firms which are formed under the Partnership Act of 1932. They are formed with a minimum of two partners. Members of the partnership firms are known as its partners. Parner can be added or subtracted at any time from the partnership firm and accordingly the Partnership Deed will be amended. Here in India there is no requirement of registration of partners because it is not compulsory to register a partner in India. The subscription of a new partner is very easy and can be done mutually by the partners. One thing which you must know is that in any situation members of the partnership firm cannot be less than two. Current blog is about the registration of partners in a partnership firm. As mentioned in the above lines that it is not compulsory to register a partner in India, we will discuss how a partner subscribes in a partnership firm without registration.
What is a Partnership Firm?
Association of two or more than two individuals or entities in order to work towards one common goal which must be lawful as per the Partnership Act of 1932, is called partnership firm registration. Although it is not compulsory to register the partners and partnership firm, it is suggested to register your partnership firm. It will be helpful during the time of disputes among the partners. The registration process is very easy and there are not many complications of partnership firm registration. It can be best for the small as well as mid sized businesses.
What is a Partnership Deed?
One of the most important documents with respect to partnership firm registration is partnership deed. Without this deed one cannot register their partnership firm. In this deed there are many clauses which are drawn after the mutual agreement of the partners of the form. In the same deed, partner related things have been mentioned in the form of clauses. How can a partner be added and how can one leave the firm? Everything is mentioned. Although it is not compulsory to register a partner, it is suggested that whenever any new partner is joining the firm partnership deed must be amended.
Whether it is Compulsory to Register a Partner or not?
In India partners are added in the partnership firm through amendment in the partnership deed. Amendment in the partnership deed is the standard form of joining a partnership firm, hence we can say that it is not at all compulsory to that a partner is registered in a partnership firm in India under the Partnership Act of 1932. Such amendments are important and have a lot of wattage as entire partnership firms are running on the basis of the partnership deed. If you are thinking this is a difficult process, you are wrong. Amendments in the partnership firms can be done easily with the mutual agreement of the partners of the partnership firms.
How to Register a Partner in a Partnership Firm?
In order to register a partner in a partnership firm follow the steps given below:
- Have a discussion among existing partners about adding a new partner.
- Reach an agreement on terms, profit sharing, and responsibilities.
- Update the Partnership Deed to include details of the new partner.
- Clearly outline the rights, duties, and share of profits for the new partner.
- Purchase the required stamp papers for the amended Partnership Deed.
- Pay the applicable stamp duty based on your state’s regulations.
- Visit a notary public to get the amended Partnership Deed notarized.
- This adds legal validity to the changes made in the deed.
- Apply for a PAN (Permanent Account Number) for the updated partnership.
- If applicable, apply for a TAN (Tax Deduction and Collection Account Number) for the firm.
- Submit the amended Partnership Deed along with the prescribed form to the Registrar of Firms.
- Pay the required filing fee.
- Obtain the updated Certificate of Registration from the Registrar of Firms.
- This certifies the inclusion of the new partner in the partnership.
- Inform your bank about the addition of the new partner.
- Update the bank account details and signatories accordingly.
- If the turnover exceeds the threshold, apply for GST registration.
- Submit necessary documents, including the amended Partnership Deed and PAN.
- Notify other relevant authorities, such as the income tax department, about the changes.
- Once all formalities are completed, welcome the new partner officially.
- Ensure smooth integration into the partnership.
Documents Required to Register a Partner in a Partnership Firm?
In order to register a partner in a partnership firm following documents are required:
- Provide a copy of any government-issued photo ID of the partner, such as Aadhar card, Voter ID, Passport, or Driving License.
- Submit a copy of any government-issued address proof of the partner, such as Aadhar card, Voter ID, Passport, or utility bills like electricity or water bill.
- Include two recent passport-size photographs of the partner.
- Furnish a copy of the PAN card of the partner.
- Amended Partnership Deed outlining the terms and conditions of the partnership, signed by all partners.
- Purchase the necessary stamp papers for the Partnership Deed based on the applicable stamp duty in your state.
- Execute the Partnership Deed on non-judicial stamp paper.
- Visit a notary public to get the Partnership Deed notarized.
Conclusion
While it is not compulsory to register a partner in a partnership firm in India, the process of adding a new partner involves crucial steps. The Partnership Act of 1932 allows for the inclusion of partners through amendments to the Partnership Deed, which serves as a fundamental document governing partner-related matters. Although not mandatory, the registration of partners is recommended for the smooth functioning of the partnership, providing clarity on rights, duties, and profit-sharing. The process involves mutual agreement among partners, updating the Partnership Deed, obtaining necessary stamp papers, notarization, and compliance with tax and legal requirements. This streamlined process ensures the seamless integration of new partners into the partnership.
