Partnership business registration
A partnership is a group or association of people who engage in business activities and distribute income or losses among each other. For example, if you and your friends or family decide to start a company together, you can operate it as a partnership. It is relatively cheap to establish and operate a partnership. The partners share income, losses, and control of the business.
A written partnership agreement is not essential for the existence of a partnership, but it is a good idea. The partnership agreement should outline how the income or loss is distributed to the partners and how to control the business.
Partnership agreements can help prevent misunderstandings and disputes about what each partner brings and what they are entitled to receive from the business. This is especially important for tax purposes if the profits and losses are not evenly distributed among the partners.
The partners in a partnership are not employees, but the partnership can also employ other workers. Partners are responsible for their own pension arrangements. However, partnerships must pay pensions for their employees.
In the partnership structure:
Revenue, loss and business control are shared by partners
The partnership has its own TFN and must submit an annual partnership income statement to show all business income and deductions
Partnerships are not required to pay income tax on the profits they earn – each partner reports his share of the partnership’s income in his tax return
Each partner is taxed at his own tax rate on his share of partnership profits and may be eligible for a small business tax credit
Partnerships must apply for ABN and use it for all business dealings
If the partnership’s annual GST turnover is $75,000 or more, it must be registered for GST
As a partner, you cannot claim deductions from the funds withdrawn by the business. The amount you receive from the partnership is not salary for tax purposes
(For more details, please refer to the official website of the Australian Taxation Office)