What is Business Partnership?

Learn with Samuel Jackson about Partnerships

Movie Case Study

The scene that you just saw shows you Jules Winnfield (played by Samuel Jackson) and Vincent Vega (played by John Travolta) enter a house where three boys are having breakfast. Jules introduces himself as a business associate of Marsellus Wallis. They identify Brett as the business partner of Marsellus Wallis and want to question him.

In this blog, Learning Perspectives will explore what exactly is a Business Partnership.

What is Business Partnership?

When two or more people decide to join hands together to run a business, it is called a business partnership. A partnership deed is drafted that mentions all the details regarding the business and profit-sharing ratio of the partners. Partnerships do not have a separate legal entity which means if the firm goes bankrupt, the private assets of the partners would be used to meet the deficit.

Features of Partnership:

  • A partnership is a business is a tie-up of two or more people.
  • These “people” can include individuals, groups of individuals, companies, and corporations, therefore partnerships are highly adaptable in form and can vary in complexity.
  • Each partner shares directly in the organization’s profits and shares control of the business operation, making it very profitable for the owners when times are good.
  • But in bad times the consequence of this profit sharing is that partners are jointly and independently liable for the partnership’s debts.
  • Two heads (or more) are better than one, your business is easy to establish and start-up costs are low, more capital is available for the business, you’ll have greater borrowing capacity, and high-caliber employees can be made partners.
  • There is an opportunity for income splitting, an advantage of particular importance due to resultant tax savings.

Rights of a Partner:

  • All the Partners of the company have the right to participate in the management of the company.
  • Partners have the right to be consulted in the running of the business.
  • Partners also have the right to allow or not allow admission of a new partner.
  • If a partner has advanced a loan to the firm, he has the right to receive interest on it, in case the rate of interest isn’t agreed upon, then interest is paid @ 6% according to the partnership act, 1932.


Many businesses in India start with 2 partners, in recent times we have seen a surge in such businesses. Mohit and Rajat Jain together launched Kimirica Hunter. They manufacture amenity products and toiletries. This company is worth Rs. 300 crores now and serves a large number of international hotel chains.


Double Entry Book Keeping by T.S Grewal


Understand Business Partnerships with a Video

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