Partnership is when two or more people (entity) go into business together. Partnerships are not hard to set up. A Partnership Agreement is required defining the partnership. They may wish to pool together their knowledge, skill and experience to set up a more efficient business. There are limited tax benefits to partnerships like husband and wife. The partnership lodges its own tax return, and the profits are distributed to partners according to the Partnership Agreement and that is assessed in the partners’ individual tax returns.
Disadvantages of partnership may arise internally, where partners may have their own opinions on how the business should be run and dispute may arise in administration, profit sharing, etc. When this occurs, the Partnership may dissolve and the business will cease. Also, any change to the Partnership Structure (e.g. adding additional partners into an existing partnership) may have capital gains tax issues.