Why a Partnership Agreement?
You have a friend. Together, you have a vision. You work together in your new business to make a profit. Congratulations, you are in a partnership.
Now that you are in a partnership, you need to document it. You can build a partnership agreement with our firm.
If you do not document your partnership, you suffer greater risks and potential losses because of the joint and several liabilities of you and your partners.
One of your business partners buys a Ferrari in the partnership name. He drives into the sunset never to be seen again. You are liable for 100% of that Ferrari’s payment. A partnership agreement reduces that risk.
Our firm’s partnership agreement mitigates the joint liability between you and your other partners:
- corporate governance is encouraged by a partnership agreement
- tighter rules between parties as to loans
- better documented fiscal restraint
- warranties and indemnities to protect individual parties
Because you built a Partnership Agreement with our firm, you can seek out your rogue business partner who bought a Ferrari under the business name and sue him.
Why document the Partnership?
A partnership agreement is a document signed by two or more parties. Unlike companies, partnerships are not taxed. You and your business partner will pay tax separately on the profits made through the partnership
Partnerships are a common structure for business owners to manage businesses.
The main advantages partnerships offer over other business structures are:
- Easy and inexpensive to set up
- Any losses are distributed to the partners (whereas losses remain stuck in companies and trusts)
- Low regulation and privacy – while the Australian Securities Investments Commission (ASIC) oversee and overregulate companies, they do not oversee partnerships
- Less paperwork and no reporting obligations to ASIC
- Flexible income splitting is a tax advantage
Please telephone us for more legal advice on this document.
Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
39 Stirling Highway, Nedlands, WA (Post Office Box 5169, Dalkeith, WA 6009)
Direct: 08 6389-0400
Reception: 08 6389-0100