Q&A

Question: How are profits and losses divided among partners?

In a partnership, profits and losses made by the business are shared among the partners based on their initial contribution percentage, unless agreed otherwise and set out in the partnership agreement. It is difficult to determine each partner’s share before the business’s financial accounts are finalised for the financial year, so it is common for partners to receive partnership ‘drawings’ throughout a financial year on account of their share of anticipated partnership profit (or loss).