What defines a partnership in business?

A partnership in business is specifically defined as an arrangement where two or more individuals come together to operate a business for profit. The correct answer reflects this definition by indicating that a partnership consists of 2 to 20 partners. This range emphasizes the collaborative nature of partnerships, highlighting that they must involve at least two people, which differentiates them from sole proprietorships, where only one owner is present.

Partnerships can comprise various professional or business practices, allowing for shared responsibilities, capital, and skills among the partners. The limitation of having no more than 20 partners aligns with many legal frameworks to ensure that the structure remains manageable and that partners can effectively collaborate.

The other choices fall short of accurately defining a partnership. A single owner would classify the business as a sole proprietorship, while the reference to more than 20 shareholders aligns with corporate structures rather than partnerships. The option suggesting a business set up with 1 to 20 owners does not clearly establish the requirement for a minimum of two active participants, which is essential in identifying a partnership.