Setindiabiz Team |Updated : June 20, 2024

Can a Partnership Firm undertake Udyam Registration?

Overview : Partnership Firms have limited potential for investment and growth, so operating them can often be financially challenging. However, meeting certain criteria can make them eligible for Udyam Registration, a legal process through which small businesses avail of MSME benefits offered by the Government. In this blog, we will discuss the meaning of Udyam Registration in detail and understand the eligibility criteria for MSME Registration for Partnership Firms to enroll under it, giving you a clearer picture of how these entities can thrive and succeed as recognized small businesses in India.

The process of Udyam Registration is quite easy and convenient. All you need to do is visit the official Udyam Registration Portal, create an account, log in, and fill out the Udyam Registration form. The documentation requirements are minimal and the government charges no fees for it. However, you must ensure that your firm qualifies for all the MSME criteria beforehand.

After obtaining Udyam Registration, your Partnership Firm will receive an MSME Certificate. On successful grant of MSME Certificate, your firm becomes eligible to avail various benefits introduced and offered by the government to foster the growth of MSMEs in India. Dig deeper into MSME Registration for partnership firm to understand the significance of MSME Registration for partnership firms in India.

What is Udyam Registration?

MSMEs or Micro, Small, and Medium Enterprises form the backbone of developing economies like India. They have a crucial role to play when it comes to employment generation, fostering entrepreneurship, and contributing to GDP growth. Realizing their significance, the Government offers various advantages to support their financial development through credit assistance, funding support, credit guarantees, interest free loans, subsidies and so on. However, to avail these advantages, MSMEs must be formally recognized as a small-scale enterprise by the Government, and Udyam Registration is the process through which this can be achieved.

Udyam Registration, formerly known as Udyog Aadhar Registration in India, is a government-initiated online process aimed at providing recognition and support to micro, small, and medium-sized enterprises in India. By obtaining Udyam Registration, small businesses can avail of several benefits, including easier access to credit, subsidies, preferential treatment in government procurement, tax incentives, and more.

The MSME registration process for Partnership firms involves providing basic information about the business, such as its type, investment in plant and machinery, turnover, and Aadhaar details of the proprietor, partner, or director.

Once the process is complete, a Certificate is granted to establish its formal recognition. The ultimate goal of Udyam Registration is not only to formalize the MSME sector, but also to empower these enterprises to thrive in the competitive business landscape of India.

Can Partnership Firms Get Udyam Registration?

Partnership firms are a form of business organization where two or more individuals come together to carry out a business with the common objective of making profits. In a partnership, the partners share the profits, losses, and responsibilities according to the terms of the partnership agreement. This agreement outlines the rights and obligations of each partner, as well as the rules governing the operation of the partnership.

Partnership firms are often deemed as small-scale businesses due to several reasons. Firstly, the ease of formation and minimal regulatory requirements make partnerships an attractive option for individuals looking to start a business with limited resources. Additionally, partnerships typically operate in sectors where personal expertise and relationships are crucial, such as professional services like law firms, accounting firms, or small retail businesses. Furthermore, partnerships often serve niche markets or local communities, allowing them to cater to specific needs with personalized services.

Now, to answer your question: Yes, partnership firms can indeed obtain Udyam Registration. The Udyam Registration scheme is not limited to specific types of business entities but is open to all types of micro, small, and medium-sized enterprises, including partnership firms. By registering under the Udyam scheme, partnership firms can avail themselves of various benefits and incentives offered by the government to support and promote the growth of the MSME sector. This includes easier access to credit, subsidies, government procurement preferences, and tax incentives, thereby helping partnership firms thrive and contribute to the economy.

MSME Classification for Udyam Registration of Partnership Firms

Determining the appropriate classification under the Micro, Small, and Medium Enterprises (MSME) category is essential for partnership firms seeking Udyam Registration. The classification criteria are based on two main factors: net turnover and net investment in plant and machinery or equipment. Understanding these classification limits and their implications is crucial for partnership firms to accurately determine their MSME status and avail themselves of the associated benefits. Here are the details:

Micro Enterprises:

• Investment in Plant and Machinery or Equipment: Not exceeding INR 1 crore
• Turnover: Not exceeding INR 5 crore.

Small Enterprises:

• Investment in Plant and Machinery or Equipment: Not exceeding INR 10 crore
• Turnover: Not exceeding INR 50 crore.

Medium Enterprises:

• Investment in Plant and Machinery or Equipment: Not exceeding INR 50 crore
• Turnover: Not exceeding INR 250 crore

Udyam Registration Benefits for Partnership Firms

Udyam Registration, introduced by the Government of India, is a revolutionary initiative aimed at simplifying the registration process for micro, small, and medium enterprises (MSMEs). Partnership firms stand to gain numerous advantages from obtaining Udyam Registration, as it opens doors to a plethora of opportunities tailored to support their growth and sustainability. Here are a few of these prominent advantages:

• Waivers on stamp duty
• Overdraft interest subvention of 2% for limits up to Rs.1 Crore
• Subsidised Electricity Bills
• Income Tax Exemptions, if applicable
• Collateral free bank loans at low-interest rates
• 50% discount on trademark and patent fees.
• Free ISO accreditation
• Streamlined process of obtaining licenses, registrations, and approvals
• Timely Payment by Buyers
• Easy to obtain government contracts

In order to reap these benefits, you will need to get your partnership firm registered with the concerned authorities within a given deadline.

Udyam Registration Process for Partnership Firms

The process of Udyam Registration for Partnership Firms is extremely easy as discussed earlier in this blog. All the steps have to be completed online on the official Udyam Portal. However, these steps must be navigated with utmost care to avoid any inconvenience or hassle. If need be, seeking assistance from a professional is always advisable. Nevertheless, hopefully, the process guide below will help you understand better.

Step 1: Visit the Udyam Registration portal

The concerned managing partner or authorised applicant needs to access the official Udyam Registration portal provided by the government. This portal serves as the platform for initiating the registration process.

Step 2: Register and Login

The next step is registering on the portal. For this, the applicant or managing partner must furnish basic information like PAN and Aadhar. Finally, an OTP must be generated to validate the details, which upon submission enables the applicant to access the Udyam Registration form.

Step 3: Fill Out the Udyam Registration Form

Udyam Registration Form seeks several mandatory information that must be filed correctly. This includes the applicant’s details, firm’s details, and details of the plant and machinery, and so on. We have listed all the details and documents required to complete this form further in the blog.

Step 4: MSME Classification of Enterprise

During the registration process, the partnership firm needs to classify itself as a micro, small, or medium enterprise based on its investment and turnover limits. This is done on a self-declaration basis initially and is later auto-sourced from the ITR details of the firm, during annual updation.

Step 5: Submit the Form & Complete Udyam Registration

Once all the details are filled out, submit the form. There is no requirement for any MSME Registration fees. Once your application gets approved, you receive an MSME Certificate valid for a lifetime, subject to annual updation of ITR, GSTR, and classification details.

While following aforementioned steps, the applicant needs to exercise caution to avoid/minimize chances of rejection or unnecessary delay in obtaining an MSME Certificate. It is advisable to take legal professional’s help to complete your MSME registration for your partnership firm in a fully professional manner thus minimizing your unnecessary expenses as well time consumption.

List Of Documents and Details for Udyam Registration of Partnership Firm

Conclusion

Udyam Registration provides partnership firms with a valuable opportunity not only to formalize their operations but also access a broad number of benefits and incentives provided by the government to support the MSME sector. By completing the process of msme registration, partnership firms can enhance their credibility, improve access to finance, and leverage various schemes aimed at fostering their growth and development. Embracing Udyam Registration not only strengthens the partnership firm’s position within the business ecosystem but also contributes to the overall economic progress by fostering entrepreneurship and innovation within the MSME landscape.
To complete MSME Registration for partnership firm, fulfilling documents requirements and following step by step process of MSME for Partnership firm is required. Consult a legal professional to obtain your MSME Registration Certificate and unlock benefits & incentives offered by the Government to foster growth of the MSME sector in India.

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