How is a partnership defined in business terms?

A partnership in business terms is defined as a legal form of business operation between two or more individuals. This structure is built on a mutual agreement where all partners share in the responsibilities, profits, and liabilities of the business. Partnerships can take various forms, including general partnerships and limited partnerships, each providing different levels of responsibility and liability among the partners.

This definition is crucial because it highlights the collaborative nature of a partnership and establishes the framework within which the partners operate. Unlike a sole proprietorship, which has a single owner, or a corporation, which is owned collectively by shareholders, a partnership specifically emphasizes the joint venture of multiple individuals working together towards common business goals. Understanding these distinctions is vital for recognizing the different business entities and their implications for management, liability, and taxation.