Partnerships
A partnership is a business structure where two or more individuals or entities carry on a business together. In a partnership, partners may share responsibilities, profits, obligations and business decisions in accordance with the arrangement between the parties.
Whether a partnership exists depends on the facts and circumstances of the business arrangement. Factors that may be considered include:
- Joint ownership of business assets
- Joint bank accounts or financial arrangements
- Registration of a business name
- Sharing of profits and losses
- Capital contributions or investment by partners
- Operating or trading in joint names
Partnership Agreement Considerations
Although a written partnership agreement is not always legally required, it is generally prudent for partners to document the terms of their business relationship before commencing operations.
A written agreement may assist in clarifying matters such as:
- Roles and responsibilities of each partner
- Profit sharing arrangements
- Capital contributions
- Decision-making processes
- Procedures if a partner leaves the business
Tax & Compliance Considerations
Depending on circumstances, a partnership may be required to lodge a partnership tax return and meet other ATO registration or reporting obligations. Individual partners are generally responsible for reporting their share of partnership income in their own tax returns.
The suitability and taxation implications of a partnership structure will depend on individual circumstances, business objectives and commercial arrangements.
Common Partnership Arrangements
A partnership structure may be considered by:
- Spouses operating a business together
- Family businesses
- Tradespeople or contractors working jointly
- Friends or business associates commencing a business venture
- Professional or service-based businesses operating jointly
GST & Reporting Obligations
Depending on the nature and size of the business, a partnership may also have GST registration, BAS lodgement and PAYG withholding obligations.
We can assist in understanding what registrations and reporting requirements may apply to your circumstances.
Our Services Include
At NEXO Accounting, we can assist with:
- Partnership registration and setup assistance
- ABN, TFN and GST registrations (where required)
- Business name registration
- Assistance in understanding partnership taxation and reporting obligations
- Business structure considerations based on your circumstances
If you would like to discuss your circumstances or arrange a consultation, please contact us on 0405 735 555 or email rs@nexoaccounting.com.au. We would be happy to assist you.