Legal Aspects: Partnership for Small Business Owners (Accounting Firm)

This assignment presents a transcript analyzing the partnership business structure, tailored for small business owners. The transcript begins by defining a partnership according to the Partnership Act (PA) 1891(QLD) and then discusses the significance of partnership agreements, outlining key elements such as ownership percentages, partner commitments, management structures, and compensation arrangements. The document then highlights the advantages of a partnership, including ease of establishment, shared expertise, and the ability to transition to a company structure. It also acknowledges the disadvantages, with a focus on partner liability. The conclusion advises that partnership is a suitable business structure for small businesses, particularly given the simplicity of engaging in business with others. The assignment is targeted at an accounting firm, offering advice to clients on the legal aspects of business structures, specifically focusing on partnerships.

Part- D: Transcript
Hello,
My name is (#your name), student of (###). Today I am here to present the transcript relating
to best suitable business structure for small businesses. Through this video, I will describe
about the term partnership, partnership agreement and how partnership is beneficial for small
business owners.
Before going further, it is necessary to understand the meaning of partnership.
Meaning of Partnership:
The Partnership Act (PA) 1891(QLD) defines a partnership as the relationship between
persons engaged in a business with a view to profit.1
The PA 1891 deals with:
 Partnership nature
 Partnership relationship with people dealing with them
 Partnership relationships with each other, and
 Partnership dissolution and its implications.
Thus, after understanding the meaning of partnership, I would like to define the
partnership agreement, its meaning and what are the key points, which must be included
in such agreement.
Partnership Agreement
Partnership agreements are not mandatory, but they are highly promoted. The default clauses
of PA provide for a particular network of legal security, but there is no assurance that they
match the plans, understandings and specifications of each partnership. A partnership
agreement indicates exactly who owns the percentage of a firm.
Following particulars must be included in partnership agreement, these are:
 A declaration on the company’s accepted principle
 Declaration of partners commitments including implicit dedication to partnership
1 Partnership Act 1891 (s.5)

 Details pertaining to partnership management structure and management authority
 Admission requirements of new partners
 Violations of the partnership agreement and recalcitrant conduct provisions
 Amendment relating provisions in partnership agreements
 Structures of compensation.
After providing all the essential information relating to partnership, I would like to mention
the reasons why partnership is a better option for business structure.
Reasons why Partnership is a better option for business structure:
Partnerships are constructions that involve two or more individuals conducting a business.
Following are the some of the benefits of partnership:
 It is easy and cost effectively to establish. Therefore, it will be easy for you to
establish partnership with minimal expenses.
 Partnership enable individuals to share experience, expertise and resources in order to
conduct a shared business together. Thus, as you are three partners you can use your
experience to run business collectively.
 It is easy to transform partnership into company structures if this is deemed necessary
as the business grows. Therefore, in future you want to expand your business you can
transform a partnership into company.
 Partnerships can be easily managed. Gains and benefits are shared among partners
according to their share. Because you are three business partners as well as family it
will beneficial for you to distribute the profits as per your share without any conflicts.
Although there are various advantages of partnership but before choosing partnership as your
business structure it is necessary to understand its disadvantages also.
Some of the disadvantages of partnership are as follows:2
 Partner liability is the biggest issue-partners can be held responsible for other
partner’s debts and commitments in relation to the company.
 Personal liability can lead to the use of personal assets to pay partner debts.
2 James Davies, Partnership Disputes (Sweet & Maxwell Limited, 2013) 308

 Unlike company, partnership is not their own legal entity, so it have unlimited
liability that is distributed throughout all partners. Partners that do not pay their part
of share of debt will hold other partners responsible.
Thus, after considering advantages and disadvantages of partnership it is advised to you that
for a small business structure partnership is the best structure, suitable to your conditions.
Furthermore, partnerships are one of the simplest ways to engage in business with others.