In a partnership, the business is owned by two or more partners and the income is received jointly. An agreement or contract outlines any; salaries, drawings, profit share, loan agreements, termination clauses, if new partners can be admitted, how books are kept and how disputes are settled and losses handled. The partnership will need an ABN and its own tax file number. Each partner will pay tax on their share of the net partnership income in their own name.
- Partners share risk and responsibility
- It's easier to raise finance with more partners
- There's a broader skill set and management base
- Each partner is personally liable for debt
- Authority is divided amongst partners
- There are limits on partnership size
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