Registration of Partnership Firm in Pakistan

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.

Registration of Partnership Firm in Pakistan

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.

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.

  1. Firm Name: Ensure it complies with regulations and avoids restricted words.
  2. Principal Place of Business: Address of the firm’s main office.
  3. Partner Details: Full names, addresses, and copies of CNICs for all partners.
  4. Business Address Proof: Utility bills or similar documents.
  5. Rent Agreement/Deed: If the business premises are rented.
  6. Fee Receipt: Original receipt for the partnership registration fee deposited at the National Bank of Pakistan.
  7. Witnessed Signatures: The registrar or authorized officer must witness partner signatures.
  8. Form A: Signed by all partners before submission.

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.

The Partnership Deed, also called the partnership agreement, is very important; it outlines rights, obligations, and management rules. It should include:

A well-drafted partnership deed typically includes the following:

  1. Firm Name
  2. Nature of Business
  3. Location/Branches
  4. Partner Details: Names, addresses, and CNIC numbers.
  5. Management Responsibilities: Work division among partners.
  6. Banking Instructions: How the firm’s bank accounts will operate.
  7. Duration: If unspecified, it is referred to as a ‘Partnership at Will.’
  8. Profit & Loss Sharing Ratios
  9. Withdrawal Limits: Maximum permissible withdrawals for partners.
  10. Admission/Retirement Rules: Guidelines for new or retiring partners.
  11. Dispute Resolution: Provisions and methods for resolving conflicts.
  12. Dissolution Method: Procedures for dissolving the partnership.

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.

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’.

  1. 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.
  2. Mutual Agreement: The partnership is based on a written or oral agreement that governs the roles and contributions of each partner.
  3. Shared Profit and Loss: The corporation divides revenues, economic reserves, and expenses into a predetermined ratio based on the terms of the partnership deed.
  4. Unlimited Liability: A Partnership firm carries unlimited liability most often; it implies that partners’ business assets can be used to clear debts.
  5. 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.
  6. 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.
  7. Joint Decision-Making: It means that decision making and management of the business are equally accomplished by partners.

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.”

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.

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!

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:

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.

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.

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.

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.

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.

A PVT Ltd company is a separate legal entity with limited liability for its shareholders, run by directors, and pays its own taxes.

A partnership firm is owned and managed by partners with unlimited liability. Profits are shared among partners and taxed as their income.

Yes, you can register a partnership firm online in Pakistan through the SECP e-portal. The process involves submitting required documents, such as the Partnership Deed and CNICs of partners.

Form 1 for the registration of a partnership firm in Pakistan is a formal application submitted to the Registrar of Firms. It includes details such as the firm’s name, business address, business type, partners’ names, addresses, and their shares in the partnership.

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.