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.

Partnership Registration

Partnership is the simplest form of Business for Two people to start. Start your Partnership and get it registered from CompaniesInn

Benefits of Partnership

  • Easy to form: Since a partnership is a relation of two or more people, its formation is very simple. It can be created by an agreement among the partners describing terms and conditions.
  • Registration: As per the law, registration is not mandatory to start a partnership. However, registration is advisable for evidence if any dispute arises in future.
  • Flexibility: Easy to manage as there are no compliance requirements compared to a company or LLP form of business structure.
  • Sharing of responsibilities: Partners can share the responsibility of partnership and the business. They can also share the decision making responsibility.
  • Tax: Compared to company, tax on profit is less in a partnership. Also, no profit distribution tax is applicable to a partnership firm.
  • Winding up: Easy to wind up a partnership firm than a company or LLP as partnership is created by an agreement.