A partnership firm is a popular business structure commonly chosen by newly established businesses in India. It requires a minimum of two partners to be formed.
The formalization of a partnership firm is done through a partnership deed an important document that outlines the terms and conditions agreed upon by the partners. This deed serves as a guide for managing the firm’s operational and financial arrangements, ensuring clarity and mutual understanding among the partners.
A partnership firm is a business arrangement where two or more individuals combine with each other to carry on the business jointly. They do share profits, as well as liability. They are bound by a legal agreement that is called a partnership deed.
They are jointly and severally liable for debts. Partnership firms are very easy to form, every partner decides on some matters, and sometimes even the tax implications are friendly. In case of general partnerships, all partners share both profits and liabilities, but in other models, either liability and profit can be split differently.