How to Start Partnership Business

If you start a partnership business in India you enjoy several advantages. Firstly you manage to generate more capital. Secondly banks are willing to sponsor them more readily. And thirdly when you have a person to assist you, you can complement each other well to share responsibilities amongst yourselves. For all the above reasons, you should aspire to start your business on a partnership basis.

How to Form a Partnership firm?

  • A “partnership deed” is vital to partnership business. You should always have the deed in writing.
  • According to rules prevalent in India, two or more members are needed to start a partnership business.
  • The number of members should not be more than 10 in case of ‘banking business and 20 in case of any other business. If not it cannot be termed legally as a partnership business.
  • You can start a partnership business only with a partnership agreement between all the partners. The partnership agreement is prepared with the help of a lawyer.

This agreement must contain –

  • The initial capital to be contributed by you and your partner
  • Profit or loss sharing ratio between both of you
  • Commission or Salary payable to the partners, if any
  • Duration of business
  • Name and address of the firm and partners
  • Powers and duties of each partner;
  • Nature and place of business
  • Other conditions to run the business

Other aspects which should be the guiding spirit of the agreement include:

  • Lawful Business: You and your partners should agree to carry on any kind of lawful business.
  • Competence of Partners: You and partner should be “competent” to enter into a partnership.
  • Sharing Profits: The main objective of your partnership business is to make and share the profits of the business.
  • Unlimited Liability: The liability of partners in a partnership is unlimited. In other words if the assets of the firm are not sufficient to meet the liabilities of a business, the personal properties of either of the partners, may be utilized to meet business liabilities.
  • Voluntary Registration: Though it isn’t mandatory to register your partnership (in some it’s mandatory) firm you need to do it to avail certain legal benefits. The effects of non-registration are:
  • Your firm will not be in a position to take any action in a court of law against any other parties for settlement of claims.
  • Dispute between you and your partners, cannot be settled through a court of law.
  • No Separate Legal Existence: Partnership firms must not have any separate legal existence from its owners.
  • Restriction on Transfer of Interest: You cannot sell or transfer your share or part or partnership of the firm to any one without the consent of other partners.
  • Continuity of Business: Partnership gets over at death, lunacy or bankruptcy of any partner. Business can be stopped at if the partners so decide.

How to Register Your Firm?

If you decide to register the procedure for registering a partnership firm all over India is quite similar. You need to do the following:

  • Prepare a “Partnership deed”
  • Fill in the required form at the “Registrar of Firms” office.
  • Submit the required form, the “Partnership Deed” along with other documents to the “Registrar of Firms” for approval.

You can start your partnership firm on rock solid agreement before you can start your partnership firm on rock solid agreement before you You can start your partnership firm on rock solid agreement before you can start your partnership firm on rock solid agreement before you venture into your business.

9 thoughts on “How to Start Partnership Business

  1. S D Reply

    Hi I have my own land in main market, I want to open retail mall as small scale business in partnership with my one friend with government loan, how we will start this business tell me from initial step in legal and construction part.

  2. P K Reply

    I have a drug license, CST, TIN No. for my shop and have just started a pharmaceutical distribution. Now I would also like to work as C and F to a new launching pharmaceutical company. If so, will I be able to continue with the same infrastructure, or a new drug license to be applied? And secondly, in later coarse if I would like to shift my present office to another district, and then what all formalities are required then.

  3. A S Reply

    Hello, I want to start partnership firm trading in emulsion & bitumen and other petrochemical products…it will involve inter state transportation of material what are the registrations required and approximate cost involved…

  4. M T Reply

    This is Machiel from BA. I am a graduate working for a BPO company. I am interested to start up a joint venture with small investment 0f 1L. Assuring will grow up the business as a public limited enterprise.

  5. A J Reply

    Hi, I am a mechanical engineer and working in an Japanese MNC. I want to start my own business for which I am searching a reliable trustful friend for starting a partnership firm. If you are interested than do mail to me. Rest we can talk.

    Thank you.

  6. P K Reply

    Hi! I am working in a bank since last ten years. I am having 8 years exp. in Banking and 2 years in Insurance sector. Now I want to setup my own business. Could you suggest me small partnership business with small investment 0f 10000 USD.

    Thank you.

  7. AP Reply


    Can you please answer the following questions I have:

    1. Can i take a loan if my partnership firm is not registered?
    2. Can i form my firm in a city where i dont have any permanent or temporary address?
    3. If a firm is not registered initially, can it be registered at a later point in time.
    4. If my firm is formed in one state can i still operate all over the country?


  8. Renjith Vinnikkal Reply

    Hi, I’m MBA (Finance) graduate from Kerala, India. I’m looking for partnership with trustable individuals in Kerala. If anybody interest mail me. my email (

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.