Forming a Partnership Firm in India
By Team Legistify / 2016-04-30
Partnership is a unique business structure that allows two or more people to hold shared ownership of a single business. Each partner is responsible for contributing money, property, labor or skills. In return, each partner shares in the profits and the losses of the business.

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Business partners often start businesses together with little planning and few ground rules. Sooner or later, they discover the hard way that what’s left unsaid or unplanned often leads to unmet expectations, anger and frustration. Partners can clash over countless things, including conflicting work ethics and financial goals, roles in the business and leadership styles. What follows is a primer on how to avoid that and set up and sustain a business partnership.

A Partnership firm is governed by the Indian Partnership Act, 1932 and is defined as 'the relation between persons who have agreed to share profits of the business carried on by all or any of them acting for all.

A firm is strictly not a person; It is an association of persons and the agreement by which a firm purports to enter into a partnership with an individual or another firm merely makes the partners of that firm individual partner of the larger partnership. A firm as such cannot enter into an agreement as a partner with another firm or individuals.

Therefore, when one partnership enters into a partnership agreement with another partnership firm, the partnership is in fact between all the partners of both the firms.

Read: Legal Benefits Of Forming A Limited Liability Partnership In India

Partnership is a unique business structure that allows two or more people to hold shared ownership of a single business. Each partner is responsible for contributing money, property, labor or skills. In return, each partner shares in the profits and the losses of the business.

Have a Legal Issue?

Get connected to the Best Lawyers and Chartered Accountants Near You!


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