A business partnership involves two or more people (but no more than 20) going into business together in a business relationship, however, a partnership is not a separate legal entity. Each partner jointly owns all the business assets and liabilities.
Again personal liability is unlimited for each and every partner in the business. If the business fails and your partner can’t afford to pay their share of any debts incurred, then you will be held liable for the shortfall.
You are also jointly responsible for any debts your partner incurs, with or without your knowledge.
Seek the help of a qualified professional to prepare a written partnership agreement, which should state each partner’s role and level of authority, their expected financial contribution and a clear procedure for dispute resolution and dissolve the partnership.
Business Partnership Agreement
Without a partnership agreement, each partner is deemed to own equal shares of each asset – Partnership Act 1895 (WA).
Before entering into any form of business partnership it is imperative that you take professional advice. There are better options!
Action steps to take today
Talk to a Business Advisor!