Question: What are the benefits of operating as a partnership?
A partnership structure is when two or more people enter into a business together. It has a great deal of advantages as it allows individuals to share financial resources, experience and expertise. If you are thinking of entering into a parternship, then you will need a well drafted partnership agreement.
Setting up a partnership is inexpensive in comparison to incorporation and has fewer legal requirements. There is little external regulation by government bodies such as the Australian Securities and Investment Commission (ASIC) and less administrative burdens that a company does; partnerships are not required to publish their annual financial records whereas companies have to.
It is also much easier to grow a business and raise capital as a partnership, as opposed to a being a sole trader. Investors and creditors are far more likely to go into business with a partnership than with an individual. As time goes on you can also bring on new partners, and the offer of partnership can be a great incentive to employees.
Answered by Lachlan McKnight
Lachlan is the CEO of LegalVision, an innovative and tech-driven law firm. LegalVision is disrupting Australia's legal industry and transforming the way in which Australian businesses access legal services. He previously worked as a corporate lawyer and investment banker in London, Paris, Amsterdam and Hong Kong. Lachlan specialises in banking and finance, capital raising and startups.
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