A partnership is a type of Business Entity in which persons (partners/owners) agree to share with each other the profits or losses of the business carried on by all or any one of them acting for all. The person who enters in partnership are known as partners. The business entity is collectively known as Firm and the name in which business is carried on is known as Firm Name.
Thus essentials for formation of partnership is
(ii) Business and
(iii) Sharing of Profits and Losses.
Agreement of partnership or Deed of partnership contains details of partnership terms & conditions and signed by all partners.
Registration of firm is not mandatory under Indian Partnership Act, however unregistered firm faces various incapacities in court of law. No member of an unregistered firm can enforce his rights under the Partnership Contract against either the firm or any present or past member of it nor can the firm sue its customer on their contracts. But a third party can always sue either the firm or its partners or both.
Indirectly registration of firm become essential in current business scenario