Should I get a partner for my business?
If you have a business (or you want to set one up), one of the most important things you need to decide is your business structure. You have four basic options:
going into partnership with one or more people,
setting up a trust.
Partnership and sole trader structures are the most common for small businesses in Australia. This week, we’ll look at the pros and cons of setting up a partnership structure.
The pros of a partnership structure
The major advantages are that partnerships:
are cheap and easy to set up.
allow you to pool your financial resources with your partners.
diversify your risk (compared to a going it alone as a sole trader).
have minimal compliance and reporting requirements (unlike a company structure).
The cons of a partnership structure
The major disadvantages of being in a partnership are:
having unlimited liability for business debts (unlike a company structure).
the potential for disagreements among partners.
having to split business profits with your partners.
If you do decide to go into partnership with one or more people in a business, the first thing you should do is draw up a formal partnership agreement. This agreement should outline:
each partner’s respective roles and responsibilities,
how business profits or losses will be split, and
how business decisions will be made.
While setting up a partnership agreement isn’t a legal requirement, it can help to avoid disputes later on.
At Scorpion Bookkeeping, we can help you with any bookkeeping support services that you may need, no matter what type of business structure you have. We currently have clients with all types of business structures in a diverse range of industries in South Australia, Victoria and New South Wales.
We can also help you to implement Xero bookkeeping software to help you. We are a Xero-certified partner, Xero certified advisor, Xero payroll certified and Xero migration certified as well as a BAS Agent company.
Contact us today to find out how we can help your business!