Partnerships are a very common form of business entity, particularly in family businesses. The origin of the law of partnerships goes back many centuries, even though it has been largely codified in the Partnership Act of 1892.
Issues of partnership law arise whenever:
- a partnership is established
- a partnership agreement is varied
- partners are admitted or retire
- disputes arise between partners
- a partnership is dissolved
We regularly prepare partnership agreements for clients. Our experience, focus and systems allow us to deal with documentation requirements in a timely and cost-effective way.
We act for a number of business partnerships including several accounting firms. We often advise in relation to complex partnership issues.
What is a partnership agreement and do I need one?
A partnership agreement is an agreement between partners in a business that regulates the conduct of the business and of the partners.
Each State has its own Partnership Act that sets out the law that applies to the partnership. Provided you understand how the Act works and are happy with it, you may not need a partnership agreement.
Some businesses may not recognise goodwill and they definitely should have a partnership agreement.
You should also consider whether your industry or particular business has its own peculiarities that need to be documented.
Some of things that you may want to consider when entering into a business with someone else are:
- What are you going to do if the business needs more money?
- What happens if your business partner dies unexpectedly?
- What happens if you and your partner having a falling out and he or she leaves and sets up in competition to you?
- What happens if you see an opportunity to expand the business, but your partner doesn’t want to or can’t afford to?