There are a number of things that can happen during the course of owning a business. One of these is changes in business structure, for a number of reasons. Looking to change to a company structure from your current position as a partner in a business? You’re basically establishing a company and, as a result, dissolving your partnership. Read on for more information about making the switch.
Partnership Dissolution
A partnership is not a separate legal entity; that is what a company is. In a nutshell, a partnership is when people or entities come together in order to do business. When there’s a partner that joins or leaves, a new one is formed. The pre-existing one is no longer valid. To end the relationship smoothly, you just have to refer to the written partnership agreement. No matter what the agreement/s is/are, of course, they remain subject to legislation that is relevant to their territory or state.
The partnership agreement must be thoroughly in the process of ending a partnership for a company to be formed instead. You can search Springfield for a law centre where you can get assisted with making sure everything is within the law. If there is no agreement to speak of with your business, your partnership will be dissolved using relevant legislation.
Find reputable solicitors and work closely with them to ensure that the dissolution is fair for both sides and done legally every step of the way. Chances are, all the partners will have to provide formal consent for you. Unless otherwise specified, the dissolution date will be the date of the agreement.
Determine how you will move forward with regards to policies and/or contracts that belonged to the partnership. Any loans made have to be dealt with properly by you as well. Make sure that your ABN (Australian Business Number) is cancelled. Set an appointment with your accountant to talk about your taxes. The partnership will likely have Capital Gains Tax implications, so go over those as well. Have the most updated version of your BAS (Business Activity Statement) at hand, and ensure that you still file a tax return for the partnership—your final one.
Are you an employee with staff? Make sure that any outstanding superannuation contributions and/or entitlements are paid for as well. If the partnership has one or more bank accounts, get those cancelled.
Company Set-Up
Determine the following things before your new company is incorporated:
- Corporate governance structure
- The people who will sit as directors
- Which type is best for your needs (public or proprietary)
Upon finalising those, register with the Australian Securities and Investment Commission (ASIC). ASIC will issue an ACN (Australian Company Number) upon payment of necessary fees. That registration will allow you to apply for a Tax File Number and ABN for the company.
Conclusion
Many things can happen during ownership of a business, including changes in structure. If you are looking to change to a company structure from a partnership, the latter should be dissolved first. Refer to the written partnership agreement or relevant legislation during partnership dissolution before moving to set up the new company.
Looking for reputable Springfield solicitors? Contact Springfield Legals today! We are a law firm in QLD that specialises in property and business conveyancing, family law and more.