Partnership

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In businesses, partnership is a type of contract wherein the persons involved in a business (partners) share the profit of running it. Partnership contract is its essence. As per the Indian Partnership Act, 1932 a partnership firm has no independent existence apart from the partners constituting it and is established by the partnership deed or agreement which can be oral or written. A partnership business can be flagged off by any two people entering into a contract and hence registering the partnership deed becomes of utmost importance, mainly for evidential uses. In case a suit has to be filed in future, it cannot be done against a third party. 

A partnership is a special type of contract and is a relation between two or more persons who have agreed to share profits of a business run by all or any one of them acting for all. The essence of a partnership is a contract between partners. It is mandatory for partners to share profits among themselves.

A partnership is one of the oldest business structures in India and is governed by the Indian Partnership Act, 1932. A partnership firm does not have an independent status apart from the partners constituting it. A partnership is not a legal entity; it has a limited identity for the purpose of tax laws. Any two people who are capable of entering into a contract can start a partnership business under an agreement called a partnership deed. The partnership agreement can be oral or written. It is not mandatory to register a partnership deed, but it is advisable to do so for evidential purposes since a firm cannot file a suit against a third party if it is unregistered.

Forming a partnership firm is simple since it does not have to be registered to start operations. A partner is an agent of the firm and all other partners. Each partner is liable for the actions of the other partners.