What is a partnership?

  • Blog
  • What is a partnership?
View All Articles

Scroll for more

I have recently been asked about partnerships generally, and what distinguishes them from other business structures. It is important to have a firm understanding of the advantages and disadvantages of a partnership, before entering into one, to run a business.

What is a partnership?

A partnership is essentially an agreement made between 2 to 20 people to conduct business together. In contrast to a company, a partnership is not a separate legal entity. Each individual of the partnership will be seen individually in the eyes of the law, which opens each individual to potential personal liability should something go wrong.

What are the advantages of partnerships?

The advantages of a partnership include the following:

  1. Simple and cost efficient to establish;
  2. The risk and responsibility is shared;
  3. Skills and experience of different partners can be combined;
  4. There are less stringent reporting requirements, in contrast to companies.

Are there any disadvantages of establishing a partnership?

Some of the disadvantages of forming a partnership include the following:

  1. The partners are jointly and severally liable. This means that each partner’s personal assets are vulnerable to creditors of the partnership;
  2. Each partner is fully responsible for debts incurred by another partner;
  3. Changes of ownership are difficult; and
  4. The potential for disputes arising between partners over the sharing of profits and strategic direction of the business.

What are some of the things I should consider if I am establishing a partnership?

  1. Make sure you are confident with the parties you are entering into a partnership with; and
  2. Ensure you entering into a Partnership Agreement. This will set out how the partnership will run on a daily basis, and in the event that something goes wrong.

Want more information on business partnerships?

If you are thinking about establishing a partnership, or you are in a partnership and seeking advice, please do not hesitate to contact FC Lawyers. Our business team have assisted many clients and partnerships through the various stages of business.

The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, FC Lawyers cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. FC Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. FC Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.


Prefer to get in touch?

With offices in Brisbane, Sunshine Coast and Sydney, our team is well equipped to provide both advice and support across a broad range of legal areas.

Free call 1800 640 509
  • This field is for validation purposes and should be left unchanged.