Partnership:

What is a partnership?

A partnership is but one of the many different ways in which to operate a business. Depending on your circumstances or your situation, there may be benefits of operating as a partnership rather than as a corporation. Whether a partnership is right for you will depend on your business objectives, purpose and unique character. A Sydney chartered accountant or Sydney accountant can help you determine which structure is suitable for you. Specifically, our Sydney chartered accountants and Sydney accountants are highly experienced in helping individuals, families and partners set up new businesses.

Partnership is defined by the Partnership Act 1892 as “the relation which exists between persons carrying on a business in common with a view of profit and includes an incorporated limited partnership. There are three legal features of the partnership that are fundamental:-

• the non-existence of a distinct entity status for the partnership;
• unlimited liability of the partners for the partnership debts and other obligations; and
• generally limited to between 2 and 20 partners.

Unlike companies where there is a distinct legal entity able to incur debts and obligations in its own name (as well as to sue and be sued), in a partnership the partners retain personal joint and several liability for any debts incurred during the partnership, even if the partnership is dissolved.

Generally speaking, the Partnership Act 1982 and common law create a number of rights and duties upon partners in a firm, including the sharing of profits and losses, limited indemnity of partners against costs accrued, sharing of management rights, access to books and records, fiduciary duties between the partners, a principal-agent relationship applying to each partner and a duty not to compete with the partnership enterprise.

We invite you to contact our Chartered Accountants now for any advice on business structures.

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