Being in a partnership means that you and at least one other person share ownership of a business, its resources and each other’s skills. In return, each partner shares the business profits and losses.
If you want to start a partnership, or you’ve already done it but aren’t sure what else is involved, here’s where you can find tips and information to help.
Partnerships are most common in certain professions, eg law, accountancy and farming. They’re relatively easy to start and can be established with a partnership agreement between the partners.
Use our Choose Business Structure tool to help you decide if a partnership is the right structure for you.
Is a partnership the best structure for your business? Use our Choose Business Structure tool to check that it’s right for your business’s needs. Just three quick questions and you’re on your way.
Tell Inland Revenue if you’ve become a partnership. Partnerships must have an IRD number for paying the business’ income tax and GST. A partnership and its partners pay tax differently. Each partner pays tax on their income using their own individual IRD numbers.
Register the partnership for GST if your turnover will be more than $60,000 a year.
You can also get a New Zealand Business Number (NZBN), a unique identifier, which any business in New Zealand can now have. Using it will speed up your interactions with government, suppliers and customers and other businesses.
Before you start, make sure you have a clear idea of why you’re starting a partnership. Use our tips and tools to test your idea for the business and see if it’s the right decision for you.
Partners usually have an equal share in a partnership, unless their partnership agreement states otherwise.
Like any relationship, partnerships can have their stresses and strains. Entering a partnership legally binds you to your other partners. It’s a good idea to have a partnership agreement to set out the rules all partners will agree to follow for the business.
Things to put in a partnership agreement include:
Partnership agreements can be complicated documents. It’s a good idea to get legal advice when creating or changing a partnership agreement.
It’s never too early to think about intellectual property (IP), which includes your logos, trade marks and inventions. When you protect IP you’re safeguarding the time, money and effort you put into a business. IP will be important throughout your business’s lifespan. So make sure you understand what it is and why it’s important.
You may start with just partners working in the business. But you’ll probably want to hire people once your business begins to grow. If you hire staff, you must register as an employer with Inland Revenue.
A business with staff has obligations to government, eg handling ACC and tax, and to its employees, eg health and safety and legal employment agreements. Check out our tips, tools and information to help you with every step of being an employer.
You might need to meet rules to detect and prevent money laundering and the financing of terrorism if you’ll be doing one or more of these tasks:
These rules affect the records you need to keep and how you must ID customers.
