A partnership firm is a type of business structure in which two or more individuals come together to carry out a business venture.
In Pakistan, registration of partnership firms is governed by the Partnership Act, 1932. In this article, we will take you through the step-by-step process of registering a partnership firm in Pakistan aka partnership registration in Pakistan
Introduction
Partnership registration in Pakistan is a legal process that is necessary for businesses that are owned and run by two or more individuals. A partnership is a form of business structure where two or more people come together to start and run a business. The partnership agreement outlines the rights and responsibilities of each partner, the share of profits and losses, and the management of the business.
The Partnership Act, 1932, governs partnership registration in Pakistan. It is an agreement between two or more persons who carry out a business or trade together with the aim of making a profit. The registration of a partnership firm is not compulsory but highly recommended to avoid any legal issues in the future.
Choose a business name
The first step to register a partnership firm in Pakistan is to choose a business name. The name must not be identical to an existing business name and should not contain any prohibited words. It should also not be misleading or offensive.
Draft a partnership deed
A partnership deed is a legal document that outlines the terms and conditions of the partnership, including the names of the partners, the nature of the business, the profit-sharing ratio, and the rights and responsibilities of each partner. The deed must be drafted in accordance with the Partnership Act, 1932.
The partnership deed is a legal document that outlines the terms and conditions of the partnership. It should include the following information:
• Name of the partnership
• Name and address of all partners
• Nature of the business
• Duration of the partnership
• Capital contribution of each partner
• Profit and loss sharing ratio
• The responsibility of each partner in managing the business
• Rules and regulations for adding or removing partners
• Dissolution procedure
The partnership deed should be signed by all the partners and should be printed on a stamp paper of the required value. The value of the stamp paper depends on the capital investment of the partnership.
Get the deed attested
Once the partnership deed has been drafted, it must be attested by a notary public or an oath commissioner. Each partner must also sign the deed in the presence of witnesses.
After the partnership deed is drafted, it must be registered with the Registrar of Firms in the area where the partnership is located. The application for registration should be submitted along with the following documents:
• Partnership deed on a stamp paper of the required value
• A copy of the National Identity Card (NIC) of all partners
• A copy of the electricity bill of the office address
• Payment of the registration fee
Register the partnership firm
The partnership firm must be registered with the Registrar of Firms in the district where the business will be conducted. The following documents must be submitted:
Obtain a National Tax Number (NTN)
The partnership firm must obtain a National Tax Number (NTN) from the Federal Board of Revenue. This is necessary to file tax returns and pay taxes on income earned by the firm.
After the partnership is registered with the Registrar of Firms, the next step is to obtain a National Tax Number (NTN) from the Federal Board of Revenue (FBR). The NTN is necessary for the partnership to file tax returns and conduct business with other companies.
To obtain an NTN, the following documents are required:
• Copy of the partnership deed •
Copy of the partnership registration certificate
• Copy of the National Identity Card (NIC) of all partners
• A copy of the electricity bill of the office address
• A letter from the bank confirming the bank account of the partnership
Register for sales tax
If the partnership firm’s annual turnover is above the threshold set by the Federal Board of Revenue, it must also register for sales tax. The firm must apply for a Sales Tax Registration Number (STRN) from the Federal Board of Revenue.
Open a bank account
The partnership firm must open a bank account in the name of the firm. This account will be used for all financial transactions related to the business.
After obtaining the NTN, the partnership must open a bank account in the name of the partnership. The bank account should be used for all financial transactions related to the partnership.
To open a bank account, the following documents are required:
• Copy of the partnership deed
• Copy of the partnership registration certificate
• A copy of the National Identity Card (NIC) of all partners
• A copy of the electricity bill of the office address
• A copy of the NTN certificate
Register with the Employees’ Old-Age Benefits Institution (EOBI)
If the partnership firm has employees, it must register with the Employees’ Old-Age Benefits Institution (EOBI) and pay contributions towards the pension and other benefits of its employees.
Register with the Workers Welfare Fund (WWF)
If the partnership firm has employees, it must also register with the Workers Welfare Fund (WWF) and pay contributions towards the welfare of workers.
Obtain any necessary licenses and permits
Depending on the nature of the business, the partnership firm may need to obtain licenses and permits from government authorities. For example, if the business involves the sale of food items, the firm may need to obtain a license from the local health department.
Filing Tax Returns
After obtaining the NTN and opening a bank account, the partnership must file tax returns with the Federal Board of Revenue (FBR) every year. The tax return should include the following information:
• Details of the partnership’s income and expenses
• Profit and loss statement
• Balance sheet
• Details of any taxes paid during the year
• Any other relevant information
It is essential to file tax returns on time to avoid any penalties or legal issues.
Documents Required for Partnership Registration in Pakistan:
Proposed name of firm
Nature and scope of business
Full name and CNIC copies of partners
Full name and CNIC copies of witnesses
Investment amount by each partner
Partnership Deed on non-judicial stamp paper worth Rs. 1,000/-
Office address of the Partnership Firm
Conclusion
Registering a partnership firm in Pakistan requires a few steps, but it is an important process that ensures the legality of the business and protects the partners’ interests. It is recommended to seek the advice of a legal expert or a business consultant to ensure compliance with all legal requirements.