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An Overview
A partnership firm is a business structure where two or more individuals come together to run a business and share its profits and losses. It is governed by the Partnership Act, 1932 in India and similar laws in other countries. This structure is popular among small and medium-sized businesses that require combined resources, skills, and shared responsibilities.
Key Features
Advantages
Disadvantages
Types of Partnership
FAQ's
A partnership firm is a business operated by two or more individuals who share its profits, losses, and responsibilities as per a mutual agreement.
Registration is not mandatory in all countries, but it is advisable. In India, for example, it involves submitting a partnership deed, along with an application form, to the registrar of firms.
A partnership deed is a legal document outlining the terms and conditions of the partnership, such as profit-sharing ratio, roles, responsibilities, and dispute resolution methods.
Partners generally have unlimited liability, meaning their personal assets can be used to settle the firm’s debts unless it is a limited partnership.
Yes, it can be converted into a private limited company, LLP (Limited Liability Partnership), or another structure by fulfilling the legal requirements.
