Remember to complete the form at the end to move on to the next stage.
Register a Partnership
You have made the decision to register your business as a Partnership Well done.
This page gives you all the steps you need to do to make it happen.
The same advice can be found in Module 2.2 Setting up your Business.
You will need to prepare a partnership agreement which outlines details of the partnership. Although this step isn't mandatory, it is highly recommended.
You will also need to register your business name and get an ABN.
Partnership Agreement
Every state in Australia has its own rules for partnerships, and as such the partnership agreement will need to be in line with your State.
A partnership agreement outlines how the partners intend to manage and operate their business. Some items it covers are
- how partners will conduct business.
- share of profits and losses of the business.
- any initial capital (and dollar equivalent work) contributions each partner has made to establish the business.
- who has the authority to make decisions on behalf of the business; and
- how the partnership signs formal documents.
- the dispute resolution process and procedures to follow if a partner dies or retires
- admission of a new partner.
- bankruptcy.
- dissolving the partnership.
Register your Business name
You will need to register the Business name for your Partnership and get an ABN.
You can do both of these at Business.gov.au official website. Click the button to go the registration page and start the process.
When you get to the page, you should firstly select 'Australia Business Number (ABN)' and 'Business Name' as the 2 new registrations to apply for.
As you are not setting up a Company you do not select 'Australian Company and Company name'.
Further down on the same page there are several other registration options; GST, PAYG, Fringe Benefit Tax (FBT) etc.
In most cases, all of these are not relevant to your new side hustle business so you don't need to tick them.
The reason why is:
- PAYG withholding and the Fringe Benefits Tax are only relevant when you employ someone. You and your partner(s) are not deemed employees.
- Luxury Car Tax and Wine Equalisation Tax are for niche services.
- You can't register for Fuel Tax Credits if you are not applying for GST.
You only need to register for GST if you think you will earn over $75K in a tax year (or are starting a taxi service). Your side-hustle will probably not reach $75K revenue in the first tax year so I wouldn't worry about registering.
You can register for GST now, even if you do not reach $75K. But the additional administrative tax reporting probably isn't worth it as you will need to do quarterly GST Business Activity Statements (BAS). That is mandatory reporting every 3 months!
You can also register for GST later on if your business is getting close to $75K.
The only benefit of registering now is if you are purchasing a lot of Goods and Services to help your business grow and want to claim back the GST you spent. But you really shouldn't be spending a lot of cash in the early days of your side hustle.
Once you have selected all your relevant registrations, click 'Next' to start the process. You will need the following information to complete the process
- your name and contact details.
- address and contact details for your new business.
- details of each person or organisation associated with the business (e.g. partner, director, secretary or shareholder).
- details of business activities.
- You will be given a Partnership Tax File Number during the registration (note you cannot use your personal TFN like you would as a Sole Trader).
- proof of identity information such as name, address and birth details.
- business activity details.
- proposed business name, which you have just worked out.
The process should take no more than 15 minutes and the cost for setting up your Partnership business name and getting an ABN is $42 for 1 year and $98 for 3 years. I would go 3 years because 1 isn't enough time.
Once completed, you should get your ABN straight away.
WELL DONE
You have a registered Partnership business and have an ABN!
Complete the form at the end of this page to move to the next stage around getting a business bank account which you is essential as you will need to prepare a separate Partnership Tax Return Form.
But firstly, do you need an accountant?
Do I need an accountant?
As a Partnership, there is some additional reporting requirements but they are still minimal compared to setting up a Company. You will need to prepare a separate Partnership Tax Return each year.
As I have never set up a Partnership I do not know what additional requirements are needed for this. I recommend you and your partner(s) read the ATO website (and others) to determine what is needed and if you think you need an accountant.
The cost for an accountant would be around $2000 to $4000 per year which could drive your decision.
As your business grows in size and complexity there will come a point when you should get an accountant. I will leave this up to you to decide when the right time is for you.
If you already have an accountant you use for your personal tax, then check with them that they can also do your new business.
If you would like to get an accountant, please click this link to learn the steps in getting one that is right for you Module 2.3 Getting an Accountant.
If you chose to "Do It Yourself" remember these 3 things:
-
keeping records of any business transactions. This is call book keeping.
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create a monthly report to help determine if you making money or losing money.
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remember you will need to pay Income tax at the end of the year if you made a profit. So have enough money to cover this. It is not automatically deducted like you are used to.
COMPLETE THE FORM
Once you have registered your business as a Partnership, the next step is to set-up your business bank account.
Please add your email below and click the button to move to the next step.
