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So, you're starting a business. You have a vision, a business partner and you're bright eyed.
You and your business partner have agreed in principle how the business will be run. For any other matter, you'll deal with it as it arises. Good idea? Probably not.
It is essential for you and your business partner to document your arrangement from the beginning — to cover the positive (like distribution of profits), the not so positive (dispute resolution) and the everyday running of the business.Cassandra Townsend, Thomson Reuters
A partnership is one of the most common types of business structures. Under the law, a partnership is:
Generally, for a partnership to exist there must be some element of repetition which indicates the conduct of a business, and from this flows the aim of generating profit which is divided between the partners.
This is regardless of how much cash each partner contributes to the business, how much time each individual partner dedicates to the business and how much revenue each partner brings in.
The legislation is a one size fits all approach — it is beneficial to have a partnership agreement tailored to your specific relationship, intentions and circumstances.
To avoid this, you need a clear, unambiguous statement of roles and authorities of each partner, and a dispute resolution procedure to have recourse to.
There's a fair chance you started your business because you have a passion for the business activity. Having a partnership agreement means you spend less time in the long term managing your relationship with business partners and more time focusing on the business of your partnership.
Your business partnership agreement should record matters such as:
You can read earlier ClearLaw articles on a range of topics.
 Partnership Act in each state and territory.
 See our earlier ClearLaw article titled "Joint ventures v. Partners: Do they owe the same duties to one another?"
Andrew is a Partner in the Maddocks Tax & Revenue team.
Andrew provides advice on:
His advice covers both direct and indirect tax considerations.
Prior to joining Maddocks, Andrew was a tax consultant at a Big 4 Chartered Accounting Firm.
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