partnership business structure
Business Basics, Managing Teams, Start Up / New to Business

Is a Partnership Business Structure right for you?

By

A Partnership business structure is made up of two or more people or entities. 

Most small business Partnerships are what is termed ‘General Partnership’ – this means that all of the partners are equally responsible for the management of the business, and each has unlimited liability for the debts incurred.

A requirement of Partnership structures is that they need their own Tax File Number and ABN, and each partnership only lasts until there is a change in partners. For example, if you add or remove a partner, a new partnership is created, which requires a new tax file number and ABN.

Each partner has a fixed interest in the partnership, and profits are distributed according to this interest at the end of the year. Tax is then paid at the individual partner level at the relevant rate.

Why would you choose a Partnership business structure?

  • Spouses in business together where there is high level of trust
  • Early stages of business and not sure if it will be a success

What else should you consider?

  • Level of risk involved in business operations
  • How / which entity type will hold your partnership interest
  • Exposure risk to activities by other partners that are external to the business (partnership interest seen as a personal asset and therefore is treated as such should your partner get into financial difficulties personally)
  • How decisions will be made – formation of ‘partnership agreement’ (lawyer)
  • Whether you intend to add additional owners / partners in the future
  • Ability to access some government grants (most require an entity to be a company)

What does a Partnership business structure look like?

What other business structures are there?

 

Our Services

To learn more about Lemonade Beach Accounting, Tax & Business Advisory Services, please follow the links below.

 

 

Recent Posts

Tax Planning Guide
Your Guide to Tax Planning

Tax planning plays a vital role in both personal and business finance, yet it is often neglected until tax season approaches. However, understanding and implementing effective tax planning strategies can make a significant difference in your financial well-being. In this guide, we’ll explore what tax planning entails, why it’s essential, and when you can leverage it to your advantage.

how to increase cashflow
How To Increase And Maintain Cashflow In Your Business

In this blog post, we’ll explore strategies to enhance your business cashflow, systemise your accounts, and make informed decisions with confidence. Let’s dive in!

gift tax and inheritance tax
Understanding Gifts & Inheritances Tax

In Australia, gifts and inheritances are generally not considered taxable income. This means that if you receive a gift or inheritance, you do not have to declare it on your tax return or pay any Australian tax. However, there are some situations where tax may apply, particularly when assets are involved.

Ethics in Accounting
Recent Tax Agent Changes: What It Means for Accountants & Clients

The accounting profession is built on trust, ethics, and compliance. As accountants, we have an obligation to act in the public interest, ensuring integrity and professionalism in everything we do. Recent changes to the Tax Agent Code of Professional Conduct introduce new requirements that reinforce these principles. At Lemonade Beach, we fully support ethical business practices and see well-structured legislative updates as an opportunity to further strengthen client trust and industry standards.