On this page
- What a partnership is
- Key factors for choosing this structure
- Register as a partnership
A partnership is formed when two or more people (up to 20) go into business together. Partnerships can either be general or limited.
A general partnership is one where all partners are equally responsible for the management of the business, and each has unlimited liability for the debts and obligations it may incur.
A family partnership is where two or more members are related to one another.
A limited partnership is one where the liability of one or more partners for the debts and obligations of the business is limited. A limited partnership consists of one or more general partners (whose liability is unlimited) and one or more limited partners (whose liability is limited in proportion to their investment). There is no maximum number of limited partners.
An incorporated limited partnership is a special type of limited partnership, primarily used by businesses engaged in high-risk venture capital projects. You should seek expert legal advice if considering forming this type of partnership. More information can be found in our incorporated association section.
Limited and incorporated limited partnerships must be registered with Consumer Affairs Victoria (CAV).
Partnerships are governed by the Partnership Act 1958.
If you are unsure about what's right for your business, our step by step guide can give you a simple & quick assessment of which structure is more suitable for your business. You can change your business structure to suit your circumstances,when the business grows or changes direction.
Key factors to consider
If you are operating under your own personal names there is no need to register but you must register a business name if you have one. For more details and examples read more in Register a business name.
Tax File Number (TFN)
A partnership has its own Tax File Number (TFN), and usually an Australian Business Number (ABN) and lodges its own, separate tax return. However, once the ATO assesses this, the partnership’s profits are divided among the partners as set out in the partnership agreement.
Each partner then adds their share of the profit (or loss) to their personal income tax for assessment by the ATO.
Goods and Services Tax (GST)
If operating as a business enterprise, the partnership registers to collect GST when annual turnover passes $75,000 (payable monthly, quarterly or annually). The ATO's 'personal services income' rules may apply if you are a consultant or contractor in a partnership.
As a member of a partnership, you are responsible for your own super arrangements because you are not an employee of the partnership. You may also be able to claim separately a deduction for personal super contributions you make.
If you employ people, you will have responsibilities, including employee payroll tax and PAYG (including reporting and paying tax on fringe benefits) and superannuation payments for any eligible employees.
ATO's Partnership Tax Return information will help when filing your returns.
Register as a partnership
Once you have looked at the pros and cons, to register as a partnership you will have to:
- determine the number of partners (if any) - both general and limited (if any). Agree amongst the partners on key issues such as limits of liability in proportion to their capital investment and the level of authority each partner holds in making binding agreements on behalf of the partnership
- draw up a Partnership Agreement highlighting key aspects such as the roles, authority and liabilities of each partner, and distribution of profits and assets. See the sample Partnership Agreement template at entrepreneur.com on what areas it should cover. Your solicitor will be able to draw up an Agreement that will meet your specific needs
- if you and your partners are not trading under your personal names, check that your proposed business name doesn't infringe on existing trademarks - use TM Check to find out.
- register your business name
- if setting up a limited partnership register your partnership with Consumer Affairs Victoria
- apply for the relevant licences and registrations
- find the right insurance for your business.