Registration of Partnership Firm in Pakistan: Get Expert Assistance
In Pakistan, the vast majority of businesses operate informally, with only a small amount being legally registered. According to the State Bank of Pakistan, 61,000 companies are registered in Pakistan, which means a mere 2% of them are corporatized businesses.
This shows the lack of business registration, which affects the business’ legitimacy in accessing resources, capital, and sustainability.
Registering a partnership firm is one of the actions that can be taken in order to narrow this gap. It gives legal identity, boosts the credibility of business enterprises, and expands the avenue for a better opportunity.
Accessing the Registration of Partnership Firm is not so easy in the absence of a competent guide. That’s where Ways Tax steps in to ensure a seamless and hassle-free experience.
Requirements for Registration of Partnership Firm in Pakistan
In order to form a partnership firm, people are required to provide some particulars and documents to the Registrar of Firms in the particular locality where the business is being carried out.
Procedure for Registering a Partnership Firm
Here is the step-by-step guide to registering your partnership firm in Pakistan.
Step 1: Establish the Firm’s Office
The office must be in a commercial area, and proof of ownership or a lease agreement must be provided.
Step 2: Draft the Partnership Deed
A partnership deed, signed by all partners on a stamp paper worth Rs. 1,000/-, documents the mutual rights and obligations of the partners. This deed serves as a formal agreement and must include the following details:
- Firm’s name and nature of business.
- Principal and additional business addresses.
- Partners’ names, addresses, and capital contributions.
- Profit and loss sharing ratio.
- Rules for dissolution, dispute resolution, and other provisions.
Step 3: Fill Form No. 1
The form requires the following information:
- Firm’s name and primary address.
- Additional business locations, if any.
- Names and joining dates of partners.
- Duration of the partnership, if applicable.
Step 4: Pay the Registration Fee
Deposit Rs. 1,000/- through Challan Form No. 32-A at any branch of the National Bank of Pakistan.
Step 5: Submit an Affidavit
Prepare an affidavit affirming the accuracy of the submitted documents and the existence of the firm’s office on stamp paper worth Rs. 5/-.
Step 6: Submit Documents to the Registrar
All partners must personally appear before the Registrar of Firms with their original valid computerized National Identity Cards (NICs). Submission timings are between 9:00 AM and 11:00 AM.
Required Documents for Registration of Partnership Firm
- Firm Name: Ensure it complies with regulations and avoids restricted words.
- Principal Place of Business: Address of the firm’s main office.
- Partner Details: Full names, addresses, and copies of CNICs for all partners.
- Business Address Proof: Utility bills or similar documents.
- Rent Agreement/Deed: If the business premises are rented.
- Fee Receipt: Original receipt for the partnership registration fee deposited at the National Bank of Pakistan.
- Witnessed Signatures: The registrar or authorized officer must witness partner signatures.
- Form A: Signed by all partners before submission.
Step 7: Obtain the Registration Certificate
Once the registrar verifies the documents and details, a registration certificate is issued within a minimum of three days.
Important Notes
- Business operations can commence without registration, but registration ensures legal protection.
- Copies of the valid NICs of all partners and witnesses must be submitted.
- All documents must be properly notarized.
Partnership Firm Registration Process in Pakistan
Once all requirements are met, the registrar will:
- Enter the firm’s name into the Register of Firms.
- File the submitted statement.
- Issue a Certificate of Registration confirming the firm’s legal status.
Drafting the Partnership Deed
The Partnership Deed, also called the partnership agreement, is very important; it outlines rights, obligations, and management rules. It should include:
Details Included in a Partnership Deed
A well-drafted partnership deed typically includes the following:
- Firm Name
- Nature of Business
- Location/Branches
- Partner Details: Names, addresses, and CNIC numbers.
- Management Responsibilities: Work division among partners.
- Banking Instructions: How the firm’s bank accounts will operate.
- Duration: If unspecified, it is referred to as a ‘Partnership at Will.’
- Profit & Loss Sharing Ratios
- Withdrawal Limits: Maximum permissible withdrawals for partners.
- Admission/Retirement Rules: Guidelines for new or retiring partners.
- Dispute Resolution: Provisions and methods for resolving conflicts.
- Dissolution Method: Procedures for dissolving the partnership.
Dissolution Clause
The deed may include a clause that a partnership shall not be terminated on the death of a partner if it is the wish of all the partners.
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How Do You Obtain a Partnership Firm’s Registration Certificate in Pakistan?
Partnership Firm Registration in Pakistan is done by submitting documents such as name of the firm, business address, the details of all the partners, a signed partnership deed and a payment receipt.
These documents are then taken to the Registrar of Firms for your region, and the partner’s signatures are to be witnessed.
After the documents are reviewed, the firm will be registered, and you will have an official Partnership Registration Certificate, which formalizes your business. You can also contact waystax to get the registration certificate of the partnership firm.
What is a Partnership Firm?
A partnership firm refers to a form of business organization where two or more people combine their efforts and capital with the aim of making profits from a business undertaking.
Though the partnership is formed ultimately by sharing the division of profits and losses, the details are put in black and white by a legal document called the ‘partnership deed’.
Key Features of a Partnership Firm
- Two or More Individuals: For a partnership to be formed, it needs to involve at least two people. The number of partners is limited at the maximum depending on the laws of the state. Generally, it is 20 in Pakistan for a non-banking firm.
- Mutual Agreement: The partnership is based on a written or oral agreement that governs the roles and contributions of each partner.
- Shared Profit and Loss: The corporation divides revenues, economic reserves, and expenses into a predetermined ratio based on the terms of the partnership deed.
- Unlimited Liability: A Partnership firm carries unlimited liability most often; it implies that partners’ business assets can be used to clear debts.
- No Separate Legal Entity: Partnership firms do not have legal entities of their own as companies do; that is, the firm itself is not recognized as a legal entity but consists of partners.
- Voluntary Registration: Partnership firms do not have legal standing to be registered compulsorily in Pakistan, but it is very much advisable to get registered for legal rights and privileges like the right to sue, etc.
- Joint Decision-Making: It means that decision making and management of the business are equally accomplished by partners.
Partnership Firm Registration Under the Partnership Act, 1932
The Partnership Act of 1932 regulates the establishment, conduct, and winding up of partnership firms in Pakistan.
It defines a partnership as:
“The relationship between persons who agree to share profits of a business carried on by all or any of them acting for all.”
Indefinite Duration of a Partnership
A partnership can last indefinitely under two conditions:
- If it continues after the agreed period elapses without signing a renewed contract for another period.
- If it still continues its operations once a certain project has been accomplished.
In both cases, it becomes indefinite in the duration but only when this is mutual, even though it can be implied.
Partnership Firm Registration Fee Calculator
Use this Partnership Firm Registration Fee Calculator by the Securities and Exchange Commission of Pakistan to estimate the costs associated with registering your partnership firm.
Simply provide the details of your firm’s capital and calculate the stamp duty, registration fees, and any additional costs involved in the process.
Click Here to Access the Partnership Firm Registration Fee Calculator
Let Ways Tax guide you through every step for a smooth and hassle-free registration!
Benefits of Registering a Partnership Firm
Registration of partnership firms in Pakistan has many benefits that help in the running and expansion of Business.
Here are the key benefits of registering your partnership firm:
1. Legal Status and Protection
A registered partnership establishes legal recognition for the firm, which means that the business can function legally. This gives protection to the partners so that they can attach legal means to solve their issues and have confidence in entering into contracts.
2. Defined Profit and Loss Sharing
By registering your partnership, the particulars of the profit and loss sharing and your business responsibilities are outlined in the partnership deed. This in a way reduces conflicts, which most often begin with disagreements on the sharing of profits or losses between partners.
3. Enhanced Business Reputation
Company registration increases the reputation of your firm, bringing it a level of authenticity that will give your consumers, investors, and financial institutions confidence in the firm. They can result in improved business prospects and, ultimately, more sustained performance.
4. Easier Access to Financial Resources
Having a registered partnership, your firm can open both current and savings accounts and get loans and credit facilities. This provides the required funding for growth and expansion.
5. Streamlined Conflict Resolution
Having a registered partnership means that the law binds the partners, and therefore, any disputes among them can be resolved as provided in the partnership deed. This avoids the possibility of disputes going on for a long time, which might affect the business.
Registration of Partnership Firm in Pakistan: FAQs
Simplify Your Partnership Firm Registration with Ways Tax
To sum up, Registration of Partnership Firm in Pakistan is highly important for receiving legal status, increasing the company’s reputation, and obtaining funds to develop the business.
If you are launching a partnership firm or are interested in its legalization, our professionals are here to assist you in the entire process.