When you’re starting a business with someone else, it’s important to choose a structure that gives you the right balance of flexibility and control. Many of our clients at POP Business operate a partnership and it’s one of the most common structures in Australia. However, like other business models, it has its benefits and drawbacks. Let’s take a closer look at what these are.
What is a partnership?
A partnership allows multiple individuals, usually between two to twenty, to run a business together. Although it isn’t a separate legal entity, a partnership must have its own Tax File Number (TFN) and Australian Business Number (ABN). It must lodge an annual partnership income tax return too.
Advantages of a partnership
Pooling skills and resources
Every individual potentially brings something unique to the business. With a partnership, you can tap into the skills, experience, network and perspective a business partner has to offer.
When you go into a partnership, you can also combine resources in order to start off with a stronger capital base. Better finances allow yo