A partnership firm is a popular and straightforward business structure where two or more individuals come together to establish a venture, sharing profits as per an agreed ratio. It is versatile, accommodating various trades, occupations, and professions. Partnership firms are favored for their simplicity and minimal regulatory requirements compared to companies, making them an efficient choice for collaborative business endeavors.
In India, the operation of partnership firms is governed by the Indian Partnership Act of 1932. Those who unite to create a partnership firm are referred to as partners, and the formation of the partnership firm is based on a contractual agreement among these individuals. The agreement among partners is commonly referred to as a ‘partnership deed.’