A partnership firm is a type of business structure formed by two or more individuals who agree to carry on a business together with shared ownership, management, and financial responsibilities. Partnerships are governed by a partnership agreement that outlines the rights, obligations, and terms of the partnership, including profit-sharing arrangements, decision-making authority, capital contributions, and dispute resolution mechanisms. Partnerships are classified into various types, including general partnerships, limited partnerships, and limited liability partnerships (LLPs), each offering different levels of liability protection, tax treatment, and management flexibility. In a general partnership, all partners have unlimited liability for the debts and obligations of the business, while in a limited partnership, certain partners have limited liability based on their investment or participation in the partnership's operations. LLPs provide partners with limited liability protection similar to corporations, shielding them from personal liability for the partnership's debts and liabilities beyond their capital contributions. Partnerships are popular among small businesses, professional firms, and family-owned enterprises due to their simplicity, flexibility, and tax advantages, allowing partners to pool resources, skills, and expertise to pursue common business objectives and share in the risks and rewards of entrepreneurship.