How to run a business with a partner
A partnership is a way of running a business with one or more people. A partnership is not a separate legal entity, but an agreement between the partners to share the profits and losses of the business. Partnerships are regulated by state laws, and it is advisable to have a written partnership agreement that outlines the rules and responsibilities of each partner.
Some benefits of running a business with a partner are
- You can split your income with your partner and reduce your tax liability.
- You can access the capital gains tax exemptions for small businesses more easily.
- You can distribute your partnership losses to your partner and offset them against other income.
- You can provide fringe benefits to your partner without paying fringe benefits tax.
- You can collaborate with any person or entity as your partner.
- You have unlimited liability for the debts and losses of the partnership, even if they are caused by your partner.
- You may have conflicts or disputes with your partner over the management or direction of the business.
- You may have difficulty adding or removing partners, depending on the terms of the partnership agreement.
- You may have to pay tax on any income that is retained in the partnership, or on any income that is distributed to non-resident or minor partners.
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MDB Taxation and Business Advisors can help you
Setting up and managing a partnership is not a simple task. It requires careful consideration of many factors, such as
- How to choose the best type of partnership for your purpose
- How to select the right partner and negotiate the partnership agreement
- How to comply with all the legal and tax requirements for partnerships
- How to maximise your tax benefits and concessions
Whether you want to use a general partnership, a limited partnership, or another type of partnership, we can help you make the right choice. Contact us today to find out how we can help you achieve your business goals.