Whilst it is not essential for a partnership to exist without a written partnership agreement, it is highly desirable. In many cases a partnership agreement is between husband and wife and is required for tax purposes, in the majority of cases. Accountants like to be able to furnish to the Australian Taxation Office evidence of the partnership agreement to confirm the allocation of profits between partners. A partnership is a good vehicle for a multitude of commercial and business relationships.
The partnership agreement regulates the rights between the partners, sets out the ownership of the partnership assets and the manner in which profits are to be distributed between partners. It may provide for the payment of a salary to one or more of the partners over and above his or her share profits. It is also common for the agreement to contain exit arrangements if and when the relationship breaks down and one or more of the partners wishes to exit the business arrangement.
A partnership does not constitute a separate legal entity but is a useful vehicle for evidencing business relationships between multiple parties. We can tailor a partnership agreement to fit your specific requirements. Preferably we would like to canvas the proposed business structure and the terms of the partnership agreement with your accountant to ensure that all legal and accounting issues have been taken account of in the document.