Partnership business is a type of business in which 2 or more persons agree to set up and manage a business outfit with the sole aim of making profit.
Partnership business is usually formed by an association of 2 to 20 persons who by agreement (legal or not) decide to pool their resources (capital) or skill or both together and establish a business enterprise. The people involved in this agreement are called “partners”. And they share profit, losses, and risks of the business.
In a nutshell, for a business enterprise to be referred to as a partnership business, it must posses the following major characteristics:
♦ The business must be owned by more than one person. Usually between 2 to 20 persons.
♦ The capital required to set up the business must be provided by the partners based on legal agreement.
♦ The business must be controlled and managed by the partners based on agreement.