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1. Partnership firms require two or more partners to join the business and contribute capital to the firm.

2. The partners should decide any name as they agree for their partnership firm subject to the requirements that the name should not be too identical or similar to the name of any other existing firm. The name should not contain words expressing or implying approval or patronage of Govt except when the Govt signifies its consent in writing to the use of such words as part of the firm’s name.

3. A Partnership deed should be prepared which specifies the respective rights and obligations of the members of a partnership. A partnership deed may be written or it can be oral. However, practically oral agreement does not have any legal backing.

4. Partnership concern should be registered with the Registrar of Firms under the provisions of Indian Partnership Act.To register the partnership firm, a partnership deed is required to be prepared which clearly defines the inter-se relationship of partners with regard to capital, profit sharing ratio, their respective authorities and responsibilities.

The following are the essential characteristics of a partnership deed:-

• Name and Address of the firm as well as all the partners

• Nature of business to be carried on

• Date of commencement of business

• Duration of partnership (whether for a fixed period)

• Capital contribution by each partner

• Profit sharing ratio among the partners

• Interest on Partner's Capital, Partners' Loan, and Interest, if any, to be charged on drawings.

• Salaries, commissions etc, if any, payable to partners

• Method of preparing accounts and arrangement for audit

• Division of tasks and responsibilities i.e. the duties, powers and obligations of all the partners.

• Rules to be followed in case of retirement, death and admission of a partner.