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.

Some drawbacks of running a business with a partner are

  • 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
At MDB Taxation and Business Advisors, we have the expertise and experience to help you with all aspects of partnerships. We will advise you on whether a partnership is suitable for your situation, and what kind of partnership you should use. We will also help you set up and manage your partnership, so you can enjoy its advantages without worrying about its complexities.

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.