A partnership is a group of individuals who carry on a business and circulate pay or losses between themselves. For instance, on the off chance that you and a relative choose to set up a business together, you may work it as a partnership. A partnership is cheaper to set up and manage and partners share income, loss and control the business together.
It is not mandatory to have a written partnership agreement to establish a partnership firm, however, it is better if there is an agreement as that agreement may include how profits and losses will be shared and how business will be controlled by partners. In partnerships, partners are not considered as employees, however, a partnership may employ other workers. Partnership is responsible to pay superannuation for its employees, however, partners are responsible for their own superannuation.
A partnership agreement also helps in avoiding disputes and misunderstanding about what each partner inputs in the firm. Partnership agreement also helps in splitting income amount partners. This is also important for tax issues as the income tax return filed by each partner will vary if the share of profit and loss as per agreement is different.
In partnerships, partners are not considered as employees, however, a partnership may employ other workers. Partnership is responsible to pay superannuation for its employees, however, partners are responsible for their own own annuation.
Important things to know about Partnership Business structure:
– Partners share profit, loss and control the business together.
– The partnership has their TFN and they must file an annual partnership return which must include all profits and deduction.
– Income tax is not paid on the profit earned by the partnership, however, each partner shows their share of income in their own income tax return.
– Taxes by each partner are paid at the individual tax rate on their share of partnership profit.
– Partners may be eligible for small business tax offset while filing income tax return.
– For all business dealings, partnership must use ABN.
– If annual turnover is $75000 or more than partnership must register for GST.
Amounts taken from partnership are not wages for tax purpose therefore a partner cannot claim deduction for the amount withdrawn from the business.
I believe this short article ought to be very helpful for you and now if you own a business then it will help you to take the decision for your partnership tax return. However, if you still have any doubt or need to dig more about this then it is best to consult professional tax agent Perth. These professionals possess keen knowledge and derive effective results.