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Elements of partnership explained by our small business accountants in Melbourne

As you may know, a partnership is a business structure in which there are two or more people conducting business together to achieve a common goal. Our small business accountants identify that in a partnership there are many benefits in sharing the workload, however, at the same time there are also a number of limitations. Our Melbourne small business accountants have detailed below the advantages and disadvantages as well as the essential elements of a partnership agreement.

Overall in a partnership, our small business accountants in Melbourne CBD encourage the combination of equal talent, capital and experience. These 3 elements provide advantages such as easy formation, flexibility in business, pooled funds and talent, shared losses and diversity of management. However, at the same time there are disabilities such as unlimited liability, possible partner conflicts, limited capital and no retained profits allowed.

In order to avoid disputes in a partnership, our accountants for small business in Southbank believe it is crucial in creating a partnership agreement that covers the following areas:

- Amount of equity invested
- Type of business
- How profits and losses will be shared
- Partner’s current and future compensation
- Distribution of assets on dissolution
- Restrictions
- Length of partnership’s life

For more information regarding the elements of a partnership, please contact our small business accountants in Melbourne today.