A partnership is when 2 or more entities operate a business as co-owners
and share income. All co-owners (i.e. partners) act on behalf of each other in the business.
This can be done with either a partnership of corporate entities (companies),
a partnership of trusts or a partnership of individuals. A partnership of individuals
is rarely ever an advisable structure due to the unlimited liability between the partners.
However, a partnership of trusts with corporate trustees in place can be
a very powerful business structure.
Advantages of partnerships
• Partnerships combine the resources and expertise of a number of people.
• Partnerships are simple to administer.
• Profits and losses are shared between partners according
to his/her share, as specified in the ‘partnership agreement’.
Disadvantages of partnerships
• All partners together are personally responsible for business debts.
• Each partner is individually liable for debts incurred by the other partners.
This is known as being ‘jointly and severally’ liable. (i.e. unlimited liability)
• All partners have a right to participate in the management of the partnership
(unless otherwise agreed).
• Partners cannot transfer their ownership to someone outside the partnership
unless the other partner(s) agree.
• Personal differences may interfere with business.
Let Bartley Partners help you explore your options.
Everyone’s business and personal needs differ.
Partnerships can be the perfect solution for many situations.
Give us a call on 8338 1033 to organise a meeting to discuss what structure is best for your situation.