What is a partnership firm?
A partnership firm is a business owned by two or more persons who agree to share its profits, governed by the Indian Partnership Act, 1932. The relationship between the partners is set out in a written partnership deed covering capital, profit sharing, roles, salary, interest and what happens when a partner joins or leaves.
It is the simplest and cheapest way for two or more people to start a business together, which is why it remains popular with traders, family businesses and small service providers across Delhi NCR.
Registration is optional, but strongly advisable. Under Section 69 of the Act, an unregistered firm cannot file a suit against a third party or against its own partners to enforce rights arising from a contract. A registered firm can.
Why start as a partnership firm?
Quick to start
The firm comes into existence as soon as the deed is signed — no waiting for approvals.
Low cost
Minimal set-up cost and very few recurring compliance requirements.
Shared skills & capital
Partners pool money, experience and contacts, and share the workload.
No ROC filings
No annual return to the MCA. Only income tax, and GST or audit where applicable.
Privacy
Financial statements are not placed on any public register.
Easy to restructure
Change terms by a supplementary deed, or convert into an LLP or company later.
What you need to form a partnership firm
- Minimum 2 partners, maximum 50 — all must be competent to contract. A minor can be admitted only to the benefits of the partnership.
- A firm name that is not identical to an existing registered firm and does not suggest government patronage.
- A written partnership deed executed on non-judicial stamp paper of the value prescribed by the state, and signed by all partners.
- A principal place of business with address proof and the owner's NOC.
- PAN of the firm — mandatory, since a partnership firm is taxed as a separate assessee.
What a good partnership deed should contain
Most partnership disputes trace back to a vague or copied deed. Ours is drafted around your actual arrangement and covers:
- Name, address and nature of business of the firm, and the date of commencement.
- Capital contribution of each partner and the profit and loss sharing ratio.
- Partners' salary, commission and interest on capital — worded to be allowable under Section 40(b) of the Income-tax Act.
- Roles, authority and banking powers of each partner.
- Rules for admission, retirement, expulsion and death of a partner, and valuation of goodwill.
- Dispute resolution, arbitration and dissolution of the firm.
Documents required
For each partner
- PAN card
- Aadhaar card
- Address proof — Voter ID, Passport or Driving Licence
- Passport-size photograph
- Email ID and mobile number
For the place of business
- Latest utility bill — electricity, gas, telephone or mobile (not older than 2 months)
- No Objection Certificate (NOC) from the property owner
- Rent or lease agreement, if the premises are rented
- Sale deed or property tax receipt, if self-owned
Partnership firm registration process
Consultation & terms Day 1
We understand the arrangement between the partners — capital, ratios, roles and exit terms.
Deed drafting Day 1–3
Our experts draft the partnership deed and share it with all partners for review.
Stamp duty & execution Day 3–5
The deed is printed on stamp paper of the correct Delhi or Uttar Pradesh value, signed by all partners and notarised.
PAN & TAN of the firm Day 5–10
We apply for the firm's PAN and TAN so that you can open the bank account.
Registrar of Firms 2–4 weeks
We file the application with the Registrar of Firms of the state with the deed, affidavit and address proof, and follow up until the Certificate of Registration is issued.
Bank account & GST After PAN
Assistance with the current account, and GST or MSME registration if required.
Partnership firm plans
Basic
Get the firm started with a proper deed.
+ stamp duty & notary at actuals
Choose Basic- Customised partnership deed
- Up to 2 rounds of revisions
- Stamp duty & notarisation guidance
- Firm PAN application
Standard
A fully registered firm.
+ govt. fees & stamp duty
Choose Standard- Everything in Basic, plus:
- Registration with Registrar of Firms
- Firm TAN application
- Bank account assistance
Premium
Registered firm, ready to trade.
+ govt. fees & stamp duty
Choose Premium- Everything in Standard, plus:
- GST registration
- MSME (Udyam) registration
- 1-year expert support
Prices are professional fees, exclusive of GST. Stamp duty on the deed depends on the state and the capital of the firm — we confirm the exact amount in your written quote.
Partnership Firm vs LLP
| Feature | Partnership Firm | LLP |
|---|---|---|
| Governing law | Indian Partnership Act, 1932 | LLP Act, 2008 |
| Separate legal entity | No | Yes |
| Partners' liability | Unlimited, joint and several | Limited to contribution |
| Maximum partners | 50 | No limit |
| Annual filings with MCA | None | Form 11 and Form 8 |
| Liability for a partner's wrongful act | All partners are liable | Only the partner concerned |
If protecting personal assets matters to you, an LLP is usually the better choice. If you want the lowest cost and simplest structure, a partnership firm works well.
Partnership firm — common questions
Is it compulsory to register a partnership firm?
No, registration under the Partnership Act is optional. However, an unregistered firm cannot sue to enforce its contractual rights, so registration is strongly recommended. Banks also prefer a registered firm.
How much stamp duty is payable on a partnership deed?
Stamp duty is set by each state and generally depends on the capital of the firm. The rates differ between Delhi and Uttar Pradesh. We calculate the exact amount and include it in your written quote.
Can a partnership firm be registered later, after starting business?
Yes. A firm can be registered at any time during its existence — but it must be registered before it files a suit to enforce its rights.
How is a partnership firm taxed?
A partnership firm is taxed as a separate entity at a flat rate of 30% plus applicable surcharge and cess. Salary and interest paid to partners are deductible within the limits of Section 40(b), provided the deed authorises them.
Can we convert the partnership firm into an LLP or company later?
Yes. A partnership firm can be converted into an LLP under the LLP Act or into a company under the Companies Act. We assist with both types of conversion.
Are partners personally liable for the firm's debts?
Yes. Every partner is jointly and severally liable, without limit, for all acts of the firm done while they are a partner. This is the main reason many businesses choose an LLP instead.