The Small Business Specialists
Phone: 13 12 49
A partnership involves two or more people (but no more than 20, with some exceptions) going into businesses together in order to make a profit.
In most cases a partnership will need to register a business name with the Australian Securities and Investments Commission (ASIC) unless it uses the surnames of all the partners involved.
A partnership is a relationship, not a separate legal entity. Each partner jointly owns all the business assets and liabilities. It's vital that each partner knows their rights, responsibilities and obligations.
Seek the help of a qualified professional to prepare a written partnership agreement.
The agreement should also state each partner's role and level of authority, their expected financial contribution and a clear procedure for dispute resolution and dissolving the partnership.
This is important because personal liability is unlimited for each and every partner in the business.
If the business fails and your partner can't afford to pay their share of any debts incurred, you will be held liable for the shortfall. You are also jointly responsible for any debts your partner incurs, with or without your knowledge.
Where there is no agreement in place, each partner is deemed to own equal shares of each asset as prescribed by the Partnership Act 1895 (WA).