LAWS20059: Individual Assignment on Business Partnership Structures

This report delves into the intricacies of business partnerships, focusing on the distinctions between general and limited partnerships. It emphasizes the importance of a written partnership agreement, outlining key aspects such as partner roles, profit-sharing ratios, and liabilities to avoid disputes. The report covers the registration process, including obtaining a Tax File Number and necessary licenses, and stresses the significance of protecting both minority and majority owner interests. It also explores profit and loss distribution methods, allowing for flexibility based on capital contributions or other agreed-upon ratios. Finally, the report examines scenarios that lead to partnership dissolution, such as insolvency, death, or partner bankruptcy, and the distribution of assets upon dissolution. The report uses references to support all the concepts discussed.

Business Structure

Overview
• When selecting “partnership” as a
business structure, understand of its
characteristics is important.
• It can be general and limited.
• Partners share equal profit and loss in
general whereas liability is specific to a
certain extent in limited partnership.
• You should also select limited partnership
for your business.

Setting up
• Registration not mandatory, but it will benefit the
partners.
• During registration, number of partners, capital
contribution and their authorities are specified
(Business, 2020).
• Filling for “Tax File Number” for separate income
tax filling.
• Application to collect licences and registration for
managing the business.
• Create a partnership agreement establishing
authorities, liabilities, profit sharing ratio and roles.

Partnership agreements
• Both oral and written
• Written are recommended since terms are
clearly specified to avoid vagueness.
• Easy resolution of dispute due to written
terms for roles, authority and
responsibilities. (LawDepot, 2020)
• Protecting minority and majority owners’
interest
• Makes it easier to determine future of the
business if one partner leave or dies.

Profit and Loss sharing
• Profits are distributed equally, unless
another profit sharing ratio is given.
• Losses are distributed in the ratio of
profits, unless decided otherwise.
• Partners can agree to distribute profits
based on their capital contribution in the
business.
• Any other ratio can also be specified.

Dissolution
• Insolvency of business, death or bankruptcy of
partner leads to dissolution.
• Court order or written notice by one partner can also
dissolve partnership business.
• When partners no longer own the business or when
their agreement expires (Hill, 2018).
• The revenue is used to pay off business’s debts and
then it is distributed equally among partners or in
their profit sharing ratio.
• No partner receive first share in the profits and they
receive equal share or as per their profit sharing
ratio.

References
• Business. (2020). Business Structures. Retrieved
from
https://www.business.gov.au/Planning/Business-
structures-and-types/Business-structures
• Hill, D. (2018). How to Dissolve a Business
Partnership. Retrieved from
https://australiandebtsolvers.com.au/research-
centre/dissolve-business-partnership/
• LawDepot. (2020). Create your partnership
agreement. Retrieved from
https://www.lawdepot.com/au/partnership-
agreement/#.Xp4n3WYzbDc