HHH Partners :: Chartered Accountants :: Number one in numbers
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD
  • HHH Partners,accountants,business,taxation,financial planning,wealth creation,Emerald, QLD

Partnerships

What is a Partnership?

A partnership involves two or more persons who carry on a trade or business. Each person contributes money, property, labour, or skill, expects to share in the profits and losses, and carries on as a co-owner of the business. A partnership can be formed by oral agreement or a legal partnership agreement between two or more persons. Just like sole traders, no formal paperwork is required unless the partnership will be doing business under a trade or business name. In general, death or withdrawal of any partner terminates the partnership unless there's agreement among the partners. A partnership is not a taxable entity.

What are the advantages? 

  • Simple and inexpensive to set up.
  • Minimal reporting requirements.
  • Shared management/staffing responsibilities.
  • More opportunities for income splitting between family members than that of a sole trader.
  • A partner's share of the business's tax losses can be offset against other personal income.
  • Combined skills, experience and knowledge can provide a better product/service.
  • Relatively easy to dissolve or exit and recover your share.
  • Access to capital.
  • Partners are not employees. Superannuation contributions and workers' compensation insurance are not payable on partners profits or drawings.

What are the disadvantages? 

  • Potential for disputes over profit sharing, administrative control and business direction.
  • Joint and several liability of partners. This means that each partner is fully responsible for debts and liabilities incurred by other partners - with or without their knowledge.
  • Changes of ownership can be difficult and generally require a new partnership to be established.

Tax Treatment

Each partner includes his or her share of the partnership's income or loss on his or her tax return.

Limited Partnerships

Limited partners have limited personal liability for claims against the business. However, they are not involved with the management or operation of businesses. They have no control over the business. Most states required filing of formal agreement for a limited partnership.

Disclaimer: This fact sheet is intended to be general information. It is not a substitute for legal or other professional advice. HHH Partners does not accept responsibility for loss to any person, who either acts or does not act because of this fact sheet.

 

 

 

 

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