Compounds are made up of elements that exist in a fixed proportion. These elements are composed of atoms. Now, the atom has subatomic particles (proton, neutron and electrons), however, these particles lack the ability to take part in chemical reactions by themselves; the smallest unit of a compound that can take part in a chemical reaction, therefore, is an ATOM.
Thus, an ATOM is the smallest unit of a compound that retains the unique properties of the compound