A partnership is a jointly agreed or shared business run between two or more people. In simple words, partnerships result when two or more people agree to jointly own the company and share responsibilities for its management and any losses generated by it. The company partners are entirely responsible for the profit and loss of their company or business. 

History of Partnership

According to the Partnership Act (1932), a partnership is a relationship between two or more members who have approved to share the profits and losses of a company’s business carried by all the firm’s co-owners. It is a type of business in which two or more but not further than twenty people are permitted to function a business. This mutually agreed agreement is written on a stamp paper as legal proof, a written contract or even an oral agreement.

People who have entered a Partnership Agreement with one another are individually called the company’s partners, and they own together the businesses and run the firm.

Elements of a Partnership Agreement

• Lawful Relation- The relationship of partners in a Partnership Agreement depends on the mutually agreed bond among them.
• Members Must Be Plural- To form a Partnership Agreement, more than one member must be present.
• Legitimate Business- Two people in a Partnership Agreement must run a clean business, i.eThe partnership must be legal and right in the eyes of the law. Two or more partners that run an illegal business are not considered to be in a Partnership Agreement.
• Allocation of Profits and Losses The profit earned from the business being run must be distributed among all the members of a Partnership Agreement and the losses are also distributed among all.
• Mutually Agreed Organization- The Partnership Agreement must be a jointly agreed union where every company member is involved in the company freely.

• Confidence- A Partnership Agreement is only possible if there is a sense of faith and trust among all the fellow members of the company.

Features of a Partnership Agreement/ Business

• A Partnership Agreement or Business must not be complex to form.
• A Partnership Agreement must have a simple Administration System.
• Liabilities must be unlimited.
• An organisation must be mutual.
• A Partnership Agreement can identify and control law. 
• Non-transferability of ownership.
• Stability is uncertain.
• Confidence and enthusiastic trust.

Types of Partnership

• General Partnership- A general partnership is one in which a partner has the authority to act and make decisions for all the partners. Partners of a company usually share losses and profits that depend totally on the agreement made by the partners of that company.

1. Partnership at Will- A Partnership Agreement is said to be at-will if there is no specific time for ending the business agreement. This type of agreement is formed for an unlimited period, and it will continue to achieve its goals.
2. Particular Partnership- A Particular Partnership is where the partnership agreement continues for a specific period to achieve its goals.

• Limited Partnership- A limited partnership or limited liability partnership is formed when partners go into business together, but the owners are only responsible for the amount they invest in the business. The general partners must be able to arrange and function the company’s business, whereas the limited partners of the company are the sole investors of the company.

These limited partners have a special tax advantage. A limited partner also has limited liability for loss of business and is liable only up to the capital amount invested.

Different types of Partners in Business

Partners in a Partnership Agreement can be of different types depending on the work they do, their nature, rights, responsibilities and duties-

• Active Partner- An active partner is a business partner who enthusiastically takes part in all the functions of the company’s business.
• Dormant Partner- A dormant partner does not actively take part in the management and administrative activities of the company business.
• Nominal Partner- A nominal partner has permitted others as he is one of the company’s partners.
• Limited Partner- A limited partner is one whose liability is very limited to the amount he invested in the business.         
• Loan Partner- A loan partner does not actively take part in the management and administrative functions of the company’s business.

Conclusion

A partnership is one of the most effective ways of putting together different skills and attributes for sharing experiences to create a powerful business enterprise. A correct partnership with the right person can result in an incredible impact on one’s business success. A partnership is a long-term continuous process that grows stronger with time as the partners devote themselves to the common goals of the company. It will help all the employees and the company members to grow and It plays a key role in terms of emergencies and needs.