Knowledge Base

Business Structure — Partnership

Business Structure


A partnership at common law is not a separate legal entity. Two or more people, or entities, can enter into an agreement either verbally or under contract to enter into a business and share in the risks and profits. Partners are jointly and severely liable for debts and litigations of the partnership.


  • A partnership agreement should be in place
  • May require a company to act as agent
  • Use of any business name should be registered
  • May require registration for TFN, ABN, GST and/or PAYG


  • Relatively inexpensive to establish
  • Ability for income splitting between partners
  • Partners may obtain 50% CGT discount
  • Small business CGT concessions easily obtained
  • Partnership losses distributed to partners to be offset against other income
  • Individual partners’ benefits not subject to FBT
  • Any entity can be a partner


  • The partners are jointly and severely liable
  • Distributions from partnership must be in proportion to ownership
  • Changes in partners will have CGT consequences
  • Partners cannot be employed by the partnership for salary packaging purposes
  • Income cannot be accumulated in the partnership

To learn about the other business structures available in Australia click the links below.

Business Structures

Selecting a business structure is one of the key decisions to make when starting a business. The structure that you choose will depend on the size and type of business, your personal circumstances and how much you plan to grow the business in the future.

Find out about the 4 main business structures below.

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