This involves two or more entities who agree to share the profits or losses of a business or investment.  It is recommended that a partnership agreement be drafted stating what the responsibilities of each partner are.  

Advantages

1. Not expensive to set up.
2. Relatively easy to set up.
3. There is an ability to split income.
4. Losses can be carried forward or used to offset the respective partner's income.
5. Small Business Tax Concessions are available.  
6. Relatively easy to dissolve.
7. Limited external regulations / partners can keep their affairs private.

Disadvantages

1. Partners are joint and severally liable.  No limited liability.
2. Each partner is liable / responsible for the other partners actions.
3. Less flexibility in distributions of income and capital.
4. No asset protection.
5. Partnership is not a separate legal entity and does not pay income tax; the tax is liable at the individual's level.
6. Other taxes may apply i.e., Payroll Tax, Fringe Benefits Tax and GST.
7. Transferring ownership may prove difficult as there will be a sale of business.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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