Partnership

A partnership is a business structure that involves a number of people who carry on a business together. You may choose a partnership over a sole trader structure for example, if you'll be jointly running the business with another person or a number of people (up to 20). There are two types of partnerships - general and limited. Partnerships are governed by the relevant law depending on your state or territory:

Key aspects of a partnership structure 

  • It's relatively easy and inexpensive to set up.
  • It requires a separate Tax File Number (TFN).
  • If you are carrying on an enterprise, you can apply for an Australian Business Number (ABN) but this is not compulsory.
  • It's not a separate entity - like a sole trader, you and your business partners are personally liable for the debts of the business.
  • You have shared control and management of the business with your partners.
  • The partnership doesn't pay income tax on the income earned. You and each of your partners pay tax on the share of the net partnership income you each receive.
  • Requires a partnership tax return to be lodged with the Australian Taxation Office (ATO) each year.
  • Each partner is responsible for their own superannuation arrangements - you are not an employee of the partnership.
  • You must be registered for GST if the annual income turnover is $75,000 or more.

More information

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