Business Entities – Partnerships
A partnership is the conduct of a business by two or more people, who have the status and authority of owners or principals.
A partnership shares much in common with a sole trader, because the business is NOT a ‘separate’ entity from the individuals who conduct it.
- In a normal partnership, the liability of members is unlimited. Liability extends to their personal property, as well as the partnership assets.
- A partnership can register a business name.
- A partnership is required to lodge an income tax return.
- The taxable income or loss of a partnership is distributed to the partners, in proportion to their designated percentage of ownership within the partnership.
- The partner declares their individual share of the profit/loss in their own income tax return, and then pays the assessed income tax.
- It is desirable that partners set out their rights and responsibilities in a written partnership agreement.
Next week, we will comment on operating a small business through a Discretionary Trust.
We will then comment on unit trusts and companies in the coming weeks.
If you would like to discuss business structures, please do not hesitate to contact us.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.