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1) Partnership business
– My concern with this is the unlimited liability, so is it possible for my company to be one of the ‘partners’ in a partnership business? Yes a company can be a Partner and so can a Trust.
– We also may want to add a third partner in the future and I understand this arrangement makes it difficult. A Partnership is not the most flexible for changes in stakeholders. It may create a new partnership each time.
– Given all of background, does it seem like a dumb choice? Can you form one entity and work together?

2) Company
Obviously this is a more expensive route, but it’s the one with more protections.
– Could my company be a shareholder in the new company? Yes
– How would this affect my partner? I’m concerned that because she doesn’t have the infrastructure that I do that she’d be disadvantaged. Their tax situation may be very different to yours. What other disadvantage could they face?
– Is there any way we can merge our existing two businesses into a single entity? Possibly. You would need to investigate if this would trigger any tax issues

Any help or advice would be appreciated. I think you probably need to speak with a professional because you will only get more general advice here.