In this episode of the Calm the Pharm podcast, host Sarah Stoddart discusses the critical distinctions between partnership and shareholding structures for pharmacy businesses. Building on last week’s focus on company structures, she clarifies common misconceptions regarding these ownership models and emphasises the importance of structured legal agreements.
A partnership involves two or more individuals or companies collaborating for a shared business goal. The partners own the business jointly, with shared profits, liabilities, and management according to their partnership agreement—though this agreement is not legally mandatory, it is highly recommended to avoid misunderstandings. Partners, regardless of their share percentage, hold unlimited liability for the business’s debts, meaning their personal assets may be at risk in case of financial issues.
In contrast, a shareholding arrangement revolves around individuals owning shares in a company, where the company itself holds assets and operates the business. Shareholders benefit from the company’s operations and usually have limited liability, meaning they are only accountable for the amount they’ve invested in shares. Therefore, their personal assets are typically protected from the company's obligations.
Sarah outlines three key differences between the two structures:
1. Exposure to Liability
2. Profit Sharing and Distribution
3. Ease of Continuity and Transferability
Understanding these differences is vital for pharmacy owners as they assess their business structures and make informed decisions. By grasping the nuances of partnership versus shareholding arrangements, business owners can effectively safeguard their financial interests and ensure smoother operations.
The episode concludes with Sarah encouraging listeners to carefully consider their ownership structure and its implications, with a reminder to tune in for the next episode focused on further practical advice for pharmacy business operations.
Calm The Pharm is brought to you by your host, Sarah Stoddart. Sarah is the founder and director of Vitality Law Australia, a boutique law firm which provides small business owners and healthcare professionals across Australia with clear legal pathways and peace of mind. She is recognised as a leader in the healthcare industry and is one of only a few lawyers in Australia with specialist experience working with pharmacy businesses.
In 2021, Sarah was named the Lawyers Weekly Women in Law Australian Sole Practitioner of the Year. She was also named as a finalist in the AusMumpreneur Business Awards. In 2022, she was named as a finalist in the Women in Business Awards for The Hills and Districts Chamber of Commerce, the Australian Law Awards and again in the Women in Law Awards.
Sarah is the co-author of business book, “Courage and Confidence”. The book is a collection of inspirational stories combined with practical tools, tips and advice written by a small group of Australian women in business. She is also a non-executive director of MS Queensland.
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