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Partnership registration is a kind of firm in which more than two or just two individuals operate a business by setting terms and objectives that may or may not be registered in the partnership deed. This type of business means that every party is ready to share the liabilities as well as assets of that firm in a predetermined ration.


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Characteristics of Partnership Firm

  •  Formed on the basis of an Agreement

Partnership firm comes into existence based on an agreement between two or more partners agree to undertake the business. The terms and conditions that govern such a partnership are outlined in a document known as the Partnership Deed.

  •  Existence of a Business Activity

The Partnership form of business activity can be formed only on the basis of the existence of business activity. The business can be anything and include any trade, industry or profession.

  •  Sharing of profit and Loss Between The Partners

Partners are entitled to share the profits as well as bear the losses if any in the course of business.

  • Existence of an Agency Relation

All partners or anyone partner acting on behalf of others can undertake partnership business. This means each partner is a principal in himself who can act in his own right. Further, he can also act on behalf of other partners by acting as their agent.

  •  Unlimited Liability of the Partners

Each Partner is personally liable for all losses arising in the course of business. That is to say, their personal assets can be used to pay off the outstanding debts of the partnership firm.

  •  Combined Management

Each partner is entitled to participate in the day to day operations of the business. However, it is not mandatory for each partner to participate in the day-to-day operations of the business. But, partners running the business need to take consent of other partners for making the requisite decisions.

  •  Limitation on the Transferability of Share

A partner cannot transfer his share to any other person. He may, however, do so on the consent of other partners.

  •  No Compulsory Registration

It is not mandatory to register the partnership form of entity. However, the partners can choose to register the firm with the Registrar of Firms.

  •  Duration of the Partnership Firm

The partnership Firm may continue as long as the partners wish to do so. However, as per law, the partnership can come to an end if any of the partners dies, retires or becomes insolvent. But, the remaining partners can continue doing business under the same name after sorting out the due share of the outgoing partner.


Following details are required in a partnership deed

   General Details

  •  Name and address of the firm and all the partners
  •  Nature of business
  •  Date of starting of business Capital to be contributed by each partner
  •  Capital to be contributed by each partner
  •  Profit/loss sharing ratio among the partners

   Specific Details

  • Apart from these, certain specific clauses may also be mentioned to avoid any conflict at a later stage:
  •  Interest on capital invested, drawings by partners or any loans provided by partners to the firm
  •  Salaries, commissions or any other amount to be payable to partners
  •  Rights of each partner, including additional rights to be enjoyed by the active partners
  •  Duties and obligations of all partners
  •  Adjustments or processes to be followed on account of the retirement or death of a partner or dissolution of the firm.
  •  Other clauses as partners may decide by mutual discussion

Is it necessary to register a partnership firm?

  • Indian Partnership Act, 1932 governs the partnerships. Registration of partnership firm is optional and at the discretion of the partners.
  •  Registration of partnership firm may be done at any time – before starting a business or anytime during the continuation of the partnership.
  • It is always advisable to register the firm since registered firms enjoy special rights that aren’t available to the unregistered firms

Documents to be submitted to Registrar are

  •  Application for registration of partnership (Form 1)
  •  Specimen of Affidavit
  •  Certified original copy of Partnership Deed
  •  Proof of principal place of business (ownership documents or rental/lease agreement)

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