Home – New Forums Starting your journey Starting Partnership(?), some questions

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  • #972716
    HappyGoLucky
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    Hey all,

    I am looking at going into business with another guy. We have only really begun talking about partnering in the least week, but we have a possible project we need to quote on in the next few days. Because of that time is of the essence.

    Just some history:
    Basically we both have years of experience in our field and are tired of working for other people. We were both laid off in the last few weeks and figured it time to make the leap. Being professionally compatible, we figured we would be more powerful together.

    We both have contacts and leads to source projects and the idea is that the workload will be shared between us. However, while things are getting off the ground (and in case this first project falls through) we each need to keep money rolling into our respective households from individual contract work.

    I am currently being courted to do some short term contract work with a third party, and will be starting next week. At the same time, I and my partner will be bidding on a project that we plan to work on together.

    So this leads to a few questions:
    1. What is the best way for me to set up myself for this short term contract work? ABN or or can I just go through my TFN? I’ve heard you can only have one ABN, so how would this conflict with any ABN we get for the partnership?

    2. Is partnership even the right way to go just yet? Should we keep it as a joint venture or something in the short term, changing to partnership if/when we can get a steady stream of work together? As I said the ideal is that we build a business together but in the meantime I think we may each need to undertake small separate individual contractor jobs to keep money trickling into our family homes. The kind of projects we are likely to be working on as a team will be about two months long each, and I am worried about any gaps in between these jobs.

    3. Will we need an ABN to even quote on a job? Or can we just hold off until the potential client has picked us.

    Thanks for having a look, sorry for the ignorance. I know some of the questions could be answered by the tax office but its the weekend and we will need to contact the potential client on Monday. I have so many other factors to think about and research so any help in these ares would be very appreciated.

    I may add some more questions as I think of them.

    -Cheers.

    #1057579
    Anonymous
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    Hi Happy Go Lucky,

    Welcome to the forum :)

    I hope you find all the answers you’re looking for. Since everyone’s circumstances are different, in many cases the best advice will be to talk to an accountant.

    Is that something you’re open to? If so, please let us know whereabouts you’re based, and I’m sure some of the community will chime in with recommendations of suitable folk in your area. If it’s relevant, you may also want to tell us what type of work it is that you’re doing.

    All the best, and thanks for joining us.
    Jayne

    #1057580
    Kennethti
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    Hello HappyGoLucky,

    I think you ask some very pointed questions and it is best to seek specific advice from an accountant in relation to these matters. Depending on where you are located, I would be happy to refer you to someone.

    #1057581
    Bright Biz
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    Good Luck!

    It’s a tough decision and speaking to your own independant accountant and laywer is always a good thing to do when thinking about entering into a partnership.

    I can tell you for sure that the answer to this question
    “1. What is the best way for me to set up myself for this short term contract work? ABN or or can I just go through my TFN? I’ve heard you can only have one ABN, so how would this conflict with any ABN we get for the partnership?”

    Is that the partnership will be registered with it’s own ABN, so if you were to apply for your own ABN as an individual they are 2 totally separate entities, but half the profits/loss count toward your own personal TFN for tax purposes :)

    DEFINITELY seek out to establish a partnership agreement, we are currently in a partnership for my husband’s business, and I can tell you that even when you know the other person well, both respect each other and go in with eyes wide open there are always strains on the partnership regardless, so it’s really just best to protect yourself and not rush things.

    Good Luck with it all,

    Loreena

    Yanese, post: 70998 wrote:
    As the others have mentioned. You will need to sit down and talk to someone. The facts that you have provided are limited to give a definite yes or no.

    Couple of pointers:
    1) An ABN will not necessarily make you a contractor (re your short term contracting gig).

    2) Whether you are a partnership or a JV, you may well find yourself in the same position for tax (i.e. treated as a partnership irrespectively).

    3) For tax purposes, the partnership will register independently so no hindrance from you contracting on your own (see point 1) though).

    4) Highly recommended: a partnership agreement if you want to go ahead with the partnership.

    5) Remember with the partnership, you carry 50% of the liability, loss & gain.

    6) Partnership is a pretty inflexible structure. May not work in the long term if one partner exit.

    In short, I would not necessarily rush into a structure because of the tender deadline. Best to focus on seeking advice; more so if you are planning to quote for more works.

    Cheers
    Yanese

    #1057582
    HappyGoLucky
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    Wow thanks for your responses everyone.

    Just to clarify, I am in Perth, if anyone has referrals I am all ears.

    All of the advice seems very sound and I am making sure to take it all in.

    #1057583
    MyGreatIdea
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    HappyGoLucky I am in Perth and have an accountant that I have worked with for 5 years (I had my own bookkeeping business and referred a lot of my clients to him) and he is now my accountant in our new business venture. He’s based in Midland, but I drive from Joondalup to see him – it’s worth it.

    He is very good at his job, easy to get hold of (he gives clients his mobile number) and is a really nice guy to top it off !

    PM me if you’re interested and I’ll send his details :)

    Wendy

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