A partnership firm is a business structure in which two or more individuals come together to operate a business with the aim of making a profit. In a partnership, each partner contributes resources such as money, property, skills, or labor, and in return, shares the profits and liabilities of the business. The key feature of a partnership is the mutual agreement between the partners to work together, share responsibilities, and make decisions for the business’s benefit. Profits and losses are typically distributed among the partners according to an agreed-upon ratio, which is often based on their initial capital contribution or role in the business. One of the defining characteristics of a partnership is joint liability, meaning all partners are collectively responsible for any business debts or legal obligations. Partnerships are flexible and allow for a range of structures, from general partnerships where all partners share equal responsibility and liability, to limited partnerships where some partners have limited liability. A partnership firm does not require complex formalities for registration, although a Partnership Deed outlining the terms, roles, and responsibilities of each partner is highly recommended to avoid future disputes and ensure smooth operation. The partnership structure is particularly beneficial for small to medium-sized businesses, as it allows for pooled resources, diverse skills, and shared decision-making while maintaining a simple and flexible business model. However, it also has its challenges, including potential conflicts between partners and unlimited liability in the case of general partnerships.