A partnership is an agreement between two or more individuals who combine their financial and managerial resources and agree to operate a business in exchange for a share of the profits made by the company. Individual members of a partnership are referred to as partners; together, they are referred to as a business or partnership firm. Section 1 of the Partnership Act (1890) defines a partnership as a legal association between two or more individuals who engage in business together for profit.
According to Longe (2002), a partnership is a kind of business in which two to twenty individuals collaborate to engage in economic activity via pooling their talents and capital. Perhaps they want to test a company plan, or they’ve discovered that their skills and talents complement one another in such a manner that they’d form an ideal corporate partnership. Occasionally, joining a partnership seems the most sensible course of action. When managing a small business with a low yearly income, a partnership is often the optimum legal structure. How a partnership is created and maintained and how it is governed and taxed almost always leads to it being the optimal kind of organization. This is not always the case, though. Profits, duties, and decision-making power must be distributed equally among partners. This is one of the advantages of cooperation, especially when the parties have complementary characteristics and work well together. However, it may create some complications. Numerous relationships have deteriorated over time. Family and friends start a firm, which ultimately fails for personal or economic reasons, resulting in a disaster. This is one of the significant disadvantages of partnerships compared to other business structures, but balancing the benefits and drawbacks is essential.