Partnership Registration

Partnership Registration


A partnership can be any endeavour undertaken jointly by multiple parties. The parties may be governments, non-profits enterprises, businesses, or private individuals. The goals of a partnership also vary widely.

Within the narrow sense of a for-profit venture undertaken by two or more individuals, there are three main categories of partnership: general partnership, limited partnership, and limited liability limited partnership.

In a general partnership, all parties share legal and financial liability equally. The individuals are personally responsible for the debts the partnership takes on. Profits are also shared equally. The specifics of profit sharing will almost certainly be laid out in writing in a partnership agreement.

Limited liability partnership

are a common structure for professionals, such as accountants, lawyers, and architects. This arrangement limits partners’ personal liability so that, for example, if one partner is sued for malpractice, the assets of other partners are not at risk. Some law and accounting firms make a further distinction between equity partners and salaried partners. The latter is more senior than associates but does not have an ownership stake. They are generally paid bonuses based on the firm’s profits.

Limited partnerships are a hybrid of general partnerships and limited liability partnerships. At least one partner must be a general partner, with full personal liability for the partnership’s debts. At least one other is a silent partner whose liability is limited to the amount invested. This silent partner generally does not participate in the management or day-to-day operation of the partnership.

Finally, the awkwardly-named limited liability limited partnership is a new and relatively uncommon variety. This is a limited partnership that provides a greater shield from liability for its general partners.

Partner in Business
Partner in Business

Types of partners

Active partners

The partners who actively participate in the day-to-day operations of the business are known as active or working partners. They contribute capital and are also entitled to share the profits. the business. They are also liable for the debts of the firm.

Dormant partners

Those partners who do not participate in the day-to-day activities of the partnership firm are known as dormant or sleeping partners. They only contribute capital and share the profits or bear the losses, if any.

Nominal partners

These partners only allow the firm to use its name as a partner. They do not have any real interest in the business of the firm They do not invest any capital, or share profits and also do not take part in the conduct of the business of the firm. However, they remain liable to third parties for the acts of the firm.

Minor as a partner

You learned that a minor i.e., a person under 18 years of age is not eligible to become a partner. However, in special cases, a minor can be admitted as a partner with certain conditions. A minor can only share the profit of the business. In case of loss, his liability is limited to the extent of his capital contribution to the business.

Partner by estoppels

If a person falsely represents himself as a partner of any firm or behaves in a way that somebody can have an impression that such person is a partner and based on this impression transacts with that firm then that person is held liable to the third party, the person who falsely represents himself as a partner is known as partner by estoppels.


Suppose in A-firm there are two partners. One is David, the other is Moses. If John- an outsider represents himself as a partner of A-firm and transacts with Lut then John will be held liable for any loss arising to Sharif. Here John is a partner by estoppels.

Partner by holding out

In the above example, if either Linus or Shading declares that David is a partner of their firm and knowing this declaration David remains silent then will be liable to those parties who suffer losses by transacting with A-firm with a belief that David is a partner of that firm. Here David is liable to those parties who suffer losses and David will be known as a partner by holding out.

Features of partnership firm- number of members, existence of business, contractual relationship, legal business, agency relationship unlimited liability and few others. 1 number of members / two or more persons: for forming the partnership firm minimum two persons are required.

The definition of a partnership is a relationship between two or more individuals. An example of partnership is two business working together.

Accounting for partnership firms has its’s own peculiarities, as the partnership firm comes into existence when two or more persons come together to establish business and share its profits. On many issues affecting distribution of profits, there may not be any specific agreement between the partners.

A partnership is a form of business where two or more people share ownership, as well the responsibility for managing the company and the income or losses the business generates.

  1. General partnership.
  2. Limited partnership.
  3. Joint venture.

Type of partnership

There are two types of partnership registered partnership and unregistered Partnership. In terms of the Indian partnership Act, 1932 (ACT}, the only criterion to commence business as a partnership is the finalization and execution of a partnership Deed between the partners. The act does not require the partnership deed/partnership firm to be registered and in other words, does not require the partnership firm to be a registered firm. Therefore, various partnership business exists as an unregistered firms. There are no penalties for non-registered of a partnership firm and a partnership firm can even be registered after formation. However unregistered partnership firms have certain rights denied in section 69 of the partnership Act which deals with the effects of non-registered partnership firm some of the disadvantages of an unregistered firm are:

  1. A partner of unregistered firm can not file a suite in any court against the Firm or other partners for the enforcement of any rights arising form a contract or right conferred by the partnership Act.
  2.  No suite to enforce a right arising form an agreement can be instituted in any court by or on behalf of a firm against any third party unless the firm is registered.
  3. An unregistered firm or any of its partners cannot claim set off or other proceedings in a dispute with a third party.

Therefore, any partnership should be registered sooner or latter.

Documents required for registration 

The application for registration of partnership firm must contain the prescribed registration form, Identity proof/address proof of partners certified a true copy of the Partnership deed entered into and proof of the principal place of business, as  identity and adders proof of the partners. Following documents are required:

  • PAN Card of the Partners.*
  • Address Proof of the Partners.(DL/Voter id/Passport)*
  • Utility Bill of the proposed Registered Office*
  • No-Objection Certificate from the Landlord*
  • Rental Agreement Copy between the Partner and the Landlord*
  • Partnership Deed.*
  • Board Resolution form Authorized partners.*
  • Mobile no and email Id of the Partners.*