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A partnership firm is a business entity that involves two or more members agreeing to share profits. It allows all partners or one partner acting on behalf of all, to conduct the business. The Indian Partnership Act of 1932 provides a definition of partnership as an agreement between people who agree to share profits from the business, whether carried out by all partners, or any of them acting on behalf of the others.

Each member of the partnership is referred to as a partner, and collectively, they form a firm. The specifics of the partnership are documented in a Partnership Deed. This legal document outlines the terms and conditions of the partnership, including the rights and duties of the partners among themselves and their legal relations with third parties.

In India, a partnership firm is a widely preferred business structure, requiring a minimum of two individuals to establish. It encompasses various trades, occupations, and professions. The Indian Partnership Act of 1932 serves as the governing and regulatory framework for partnership firms in the country. Partnerships are formed through a contract known as a Partnership Deed, which establishes and regulates the relationships between partners and the partnership firm.

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