The partnership form of business organisation grew out from the limitations of sole proprietorship. When the business expands, one man is unable to arrange the financial resources and bear the risks.
He cannot supervise and manage all the functions of business personally. Therefore, two or more persons join hands and combine their capital and skill to start and run a business, Partnership is thus an extension of sole proprietorship.
A partnership is a voluntary association of two or more persons who agree to carry on some business jointly and share its profits and losses. They combine their funds and skills to carry on business together. Some popular definitions of partnership are as follows:
Partnership is the relation existing between persons competent to make contract, who agree to carry on a lawful business in common with a view to private gain.
A partnership or firm as it is often called is, then a group of men who have joined capital or services for the prosecuting of some enterprise.
Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any one of them acting for all.
A Partnership is a form of business organisation in which two or more person’s upto a maximum twenty join together to undertake some form of business activity.
Two or more individuals may form a partnership by making a written or oral agreement that they will jointly assume full responsibility for the conduct of business.
The persons who enter into partnership with the one another are individually called ‘partners’ and collectively a ‘firm’. The name under which they carry on business is called the ‘firm name’.