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Righteo :)

So before I even go to an accountant or lawyer I need clarification on one thing that will help me decide if the notion of working with my mate in a professional way is within the realms of possibility.

My understanding of a partnership that may be suitable for my case comes from this website: (http://www.commerce.wa.gov.au)

What is a limited partnership?

Under s4 of the Act, a limited partnership is one formed by up to 20 persons, at least one of whom must be a general partner and at least one a limited partner. Within those parameters there are no further restrictions on the number of general or limited partners who may comprise the firm.

The general partner(s) is liable for all of the debts and obligations of the partnership or firm; the limited partner(s) contributes a defined amount of capital to the partnership, but is not otherwise liable for its debts or obligations. Limited partners might perhaps be thought of as “silent partners” in that by s6 of the Act they may not take any part in the management of the partnership business; if they do, they become liable – for that period of management at least – for the debts and obligations of the firm in the same way as a general partner.

Similarly, if a limited partnership is formed and not registered in accordance with the Act, the partnership is deemed to be a general partnership and every limited partner deemed to be a general partner (s5).

Apart from the Act, the Partnership Act (1895) and the rules of equity and common law also apply to the limited partnership, unless inconsistent with the Act.

So my questions are:

If I became a limited/silent partner and the business goes belly up because of poor management or GFC or the bubonic plague or something I bear no responsibilities?

If I became a limited/silent partner and the business goes belly up because of breaking the taxation laws, I bear some/equal responsibilities?

Thanks for your time,