I’m baaaack! Last month we touched on the topic of sole trader business structures and today I’m here to guide you through our next business structure – a partnership.
It’s critical that as business owners, we carefully consider how we choose to approach our ventures. Assessing all the pros and cons before making any permanent decisions can save us a lot of trouble (and time) down the track.
Partnership structures are known as one of the simpler types of business and are super easy to set up. They include the joint effort of two or more individuals, classified as ‘partners’, who run and equally distribute income and losses. Partnerships allow for shared control and are not required to pay income tax.
Now that you know a bit about a partnership, let’s see if this structure is right for your biz…
• Inexpensive and super easy to set up
• Less financial burden than other structures such as a sole trader
• Use of different skill sets and ideas from multiple partners
• No reporting obligations
• Risk of disputes or disagreements in management
• Unlimited personal liability, meaning partners are fully responsible for any liabilities of the business
• Taxed at an individual tax rate based on net share income
• All profits are split despite level of involvement
Oh, and one more thing before we go! We recommend chatting to your accountant or seeking further legal advice before deciding on your business structure.
Want to learn more about the partnership business structure? Contact IM Business Solutions in Perth today.