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Dissolution means to wind up or to close down. When business relations among the partners in a partnership firm comes to an end, it is known as Dissolution of Partnership.

When one/more partner take decision to close the partnership firm, it is known as Dissolution of Partnership firm. Dissolution is the last stage of closure of business.
The relationship between Partners is referred to as partnership. While all the partners collectively are called firm. Dissolution of a firm is different from dissolution of partnership.

In short dissolution of partnership may not include dissolution of the firm, but dissolution of the firm means dissolution of the partnership. Indian Partnership Act 1932, section 39 provides that “The dissolution of the partnership between all the partners of a firm is called the dissolution of a firm.” It implies the complete breakdown of the relation of partnership between all the partners.

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