A partnership firm is a business structure formed by an agreement between two or more people (partners) to co-own and operate a business for profit.

• Number of Partners: Requires a minimum of two partners.
• Shared Ownership and Profit: Partners share ownership of the business and its profits according to a predetermined agreement. This profit-sharing ratio doesn’t have to be equal and can be based on factors like capital contribution or effort invested.
• Shared Liability: Unless it’s a limited partnership (discussed below), partners generally have unlimited liability. This means each partner is personally responsible for the debts and obligations of the firm, exceeding the amount of their investment.
• Management: All partners can participate in management and decision-making of the business. The specific roles and responsibilities can be outlined in a partnership deed, a legal document formalizing the agreement between partners.
• Formation: A formal partnership deed is recommended for all jurisdictions.

Types of Partnership Firms:

1. General Partnership: The most common type of partnership, with all the features mentioned above.
2. Limited Partnership: At least one partner (general partner) has unlimited liability, while others (limited partners) have limited liability to the extent of their investment.

Documents required For  Partnership Firm incorporation:

1. Partnership Deed: This is a vital document that outlines the terms and conditions of the partnership between the partners. It should include details like the firm’s name, business nature, partners’ names and addresses, profit-sharing ratio, capital contribution by each partner, term of the partnership, dispute resolution mechanism, and other relevant clauses.
2. PAN Card of the Firm: You will need a Permanent Account Number (PAN) for the firm to operate bank accounts and file income tax returns.
3. Address proof: Rent agreement or utility bills (not older than three months) of the place where the firm will operate serve as proof of residence.