Partnership Firm

Partnership Firm Registration

A partnership firm is created among partners who share profits and losses as per their agreement, outlined in the partnership deed. Governed by the Indian Partnership Act 1932, this law defines rights, duties, and relationships between partners and third parties under Section 4. This arrangement solely arises from a contract, not from status, and must be voluntary and contractual. A partner not actively involved is a "dormant partner," while one lending their name without real interest is a "nominal partner." The partnership's essence lies in the agreement between partners, shaping their responsibilities and dealings according to the Indian Partnership Act 1932.


  • In a partnership, partners unite with the aim of making a profit.
  • At least two individuals are required to start a partnership firm.
  • Partnership formation is exclusive to individuals, not companies or other legal entities.
  • A clear agreement among partners is essential for the partnership to begin.
  • There's no set minimum share capital needed to start a partnership.


  • A partnership firm requires at least 2 and up to 10 members for banking businesses and 20 for non-banking activities.
  • It's established through a contractual bond.
  • Partnerships aim to conduct legal businesses, share profits, and manage losses together.
  • There are limits on transferring shares. Risk gets distributed among partners.
  • Partnerships are simple to establish and offer flexibility.
  • They often benefit from lower tax rates.

Documents required for partnership firm registration

To register a business firm, you'll need:

  • Business firm's name.
  • Address proofs for the business firm.
  • PAN copies of all partners.
  • Address proofs for all partners.
  • Rental agreement (if the place is rented) and an EB bill.


Yes. A partnership firm can indeed be formed for a particular business undertaking. For undertaking a person may become a partner with another.

In legal terms, every partner is considered an agent of the others and is expected to act in good faith when conducting business.

In a partnership, the firm holds responsibility for the wrongful actions of its partners.

Yes. The death of the partner dissolves the firm.

Trust forms the foundation of a partnership, enabling collaboration to solve problems by combining skills, knowledge, and finances for effective partnership operations.

In a partnership, general partners are personally responsible for business debts, unlike in an LLC where this liability doesn't apply.

When one party fails to fulfil their part of the agreement, it's termed as a breach. Any unmet terms in the agreement constitute a breach.

For an agreement to be legally binding, it needs consideration. This means both parties involved should exchange something valuable as part of the agreement.

A performance agreement is created to fulfil a specific task. Music bands often use these agreements to finalize their deals.

A partnership firm itself doesn't pay income taxes. Instead, the income earned by the partnership passes through to the individual partners' tax returns.