Partnership agreement, Harbourline Physiotherapy

Partnership agreement template

Three physiotherapists have run one Newcastle practice together since 2024 without anything in writing. This agreement records what the handshake never covered: uneven capital sitting beside uneven hours, the six decisions no partner can make alone, and what a leaving partner is owed.

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Harbourline Physiotherapy

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This agreement is made on 1 October 2026 between Anita Rasheed of Merewether NSW 2291, Tomas Vukovic of Hamilton NSW 2303 and Priya Nandakumar of Adamstown NSW 2289. Each is called a partner and all three together are called the partners.

The partners already practise together at 14 Watt Street, Newcastle NSW 2300. This agreement records the terms they have been working to and settles the things a handshake never covered: what happens to the capital, who decides what, and how a partner leaves without unwinding the practice.

The partners carry on business in partnership under the name Harbourline Physiotherapy, providing physiotherapy, exercise physiology and rehabilitation services, and anything reasonably connected with them.

The partnership is taken to have commenced on 1 July 2024 and continues until it is ended under clause 14. Nothing done between that date and the date of this agreement is invalidated by the absence of a written agreement.

Equipment, fit out, the practice name, the patient list, the booking system and the goodwill of the business are partnership property, however they were acquired and whoever paid for them. A partner who brings personal equipment into the practice keeps it, and it is listed in Schedule 1.

The lease of 14 Watt Street is held by all three partners jointly. A partner who leaves remains liable under the lease until the landlord releases them in writing, and the continuing partners must ask for that release within 30 days of the exit date.

Partner	Capital contributed	Profit share	Monthly drawings
Anita Rasheed	$60,000	40%	$6,000
Tomas Vukovic	$60,000	40%	$6,000
Priya Nandakumar	$30,000	20%	$3,000
Total	$150,000	100%	$15,000

A capital account is kept for each partner. It is credited with capital contributed and with profits that the partners resolve to retain, and debited with capital repaid and with losses charged under clause 3.2.

No partner may be required to contribute further capital. If the partners resolve to call for more, each may contribute in proportion to their profit share, and a partner who does not contribute has their profit share adjusted at the next 30 June to reflect the new capital proportions.

No interest is paid on capital. A partner who lends money to the partnership beyond their capital is paid interest on that loan at two percent above the Reserve Bank cash rate, and the loan ranks ahead of any distribution of profit.

Net profit is shared 40 percent to Anita Rasheed, 40 percent to Tomas Vukovic and 20 percent to Priya Nandakumar. Profit is calculated after all expenses of the practice, including the salaries of employed staff but not including partner drawings.

Losses are borne in the same proportions as profit is shared.

Each partner may draw the monthly amount in the table above on the last business day of each month. Drawings are on account of profit, not in addition to it, and are reconciled when the annual accounts are settled.

A partner whose drawings for the year exceed their share of profit repays the difference within 60 days of the accounts being settled, or agrees in writing that it is charged against their capital account.

The partnership lodges a partnership return but pays no income tax on the profit. Each partner returns their own share and pays their own tax and any pay as you go instalments. The partnership pays no partner a salary and makes no superannuation contribution for a partner.

Any partner may make an ordinary operating decision alone, including hiring a therapist, ordering supplies and setting an individual fee within the published schedule.

The decisions listed below require the written agreement of all three partners.

The partners meet at least monthly. Minutes are kept and, once approved at the following meeting, are the record of what was decided. A decision recorded in approved minutes counts as written agreement for clause 4.2.

A partner may teach, examine, write, present or hold a board position, and may keep the fees, provided the work does not compete with the practice, does not use partnership property and does not reduce the hours in clause 5.

A partner may not treat patients outside the practice within 10 kilometres of 14 Watt Street without the written agreement of the other partners. Locum work in a public hospital is not caught by this clause.

All practice money is banked into the partnership account. Payments above $5,000 require two partners to authorise them. No partner may open a further account in the partnership name alone.

Accounts are prepared for each year ended 30 June by the partnership accountant and given to each partner by 31 October. Once approved in writing by all partners they are binding, except where an error is found within twelve months.

Every partner may inspect the books, the practice management system and the bank records at any time, and may bring their own accountant to do it at their own cost.

A new partner is admitted only with the written agreement of all existing partners, and only after signing a deed agreeing to be bound by this agreement as if named in it.

The price of an incoming share is the value of the partnership under clause 9.3 multiplied by the share being acquired. The payment goes to the partners whose shares are diluted, in proportion to the dilution, not into the partnership.

A partner may retire from the partnership by giving six months written notice to the others. The partnership is not dissolved by a retirement; the continuing partners carry it on.

A partner ceases to be a partner immediately if they lose their registration, become bankrupt, or are found by the other partners acting reasonably to have committed serious misconduct in the practice.

The value of the partnership is the average net profit of the three most recent completed financial years multiplied by 2.5, plus the written down value of equipment, plus the cash at bank, less all liabilities. The outgoing partner is paid that figure multiplied by their profit share, plus the balance of their capital account.

One third within 60 days of the exit date, and the balance in eight equal quarterly instalments with interest at the Reserve Bank cash rate plus two percent on the amount outstanding. The continuing partners may pay early without penalty.

A partner may not sell their share to anyone outside the partnership without first offering it to the continuing partners on the same terms, who have 30 days to accept.

On the death of a partner the partnership continues between the survivors. The estate is paid out under clause 9.3 and 9.4, and has no right to be admitted as a partner or to take part in the business.

A partner unable to work through illness or injury continues to receive their profit share in full for three months, then half for a further three months, then nothing. If they are still unable to work after twelve months they are treated as having retired on that day.

For twelve months after leaving, a former partner will not practise physiotherapy within five kilometres of 14 Watt Street. If a court finds twelve months or five kilometres unreasonable, the clause applies for nine months, then six, and within three kilometres, then two, taking the first combination that is enforceable.

For twelve months after leaving, a former partner will not solicit a patient treated by the practice in the previous year, or an employee of the practice. A patient who chooses to follow the partner without being approached is free to do so, and the partner must record that the patient made the approach.

Cover	Minimum limit	Held by
Professional indemnity	$20,000,000 each claim	Each partner individually
Public liability	$20,000,000 each occurrence	The partnership
Business contents and equipment	Full replacement value	The partnership
Business interruption	12 months of gross profit	The partnership

Each partner gives the others a certificate of currency for their professional indemnity cover at every renewal. Professional indemnity cover is held for a further seven years after a partner leaves, at the cost of that partner.

The partners may end the partnership at any time by written agreement signed by all of them.

On dissolution the assets are sold, then applied in this order: outside creditors, then partner loans with interest, then capital accounts, and anything left over is divided in profit shares. If the assets do not cover the debts, the shortfall is borne in profit shares.

Clinical records are kept for the periods required by law whatever happens to the partnership, and the partners agree in writing who holds them and how a patient asks for a copy before the practice closes.

The laws of New South Wales apply, including the Partnership Act 1892 (NSW) to the extent this agreement does not displace it.

This agreement may be varied only in writing signed by all partners. Approved minutes may record a decision but do not vary this agreement.

This agreement and its schedule are the whole agreement between the partners and replace every earlier understanding, written or spoken.

Equipment a partner brought into the practice and still owns personally, referred to in clause 1.3. Anything not listed here is partnership property. The list is updated by written agreement whenever an item is added or removed.

Item	Owned by	Insured value
Portable ultrasound unit, serial PU-4471	Anita Rasheed	$8,400
Isokinetic dynamometer, serial ID-2208	Tomas Vukovic	$21,000
Two treatment plinths and a shockwave head	Priya Nandakumar	$6,900

Executed by each partner, who confirms they have had the opportunity to obtain independent legal and accounting advice on this agreement. This agreement may be signed in counterparts and by electronic signature.

Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Contents: Fifteen clause groups with their numbers, from capital through to dissolution, so a partner can turn straight to the one that matters.
Parties: Three named partners with their suburbs, then a paragraph explaining that the practice already exists and this document records the terms they have been working to.
1. The partnership: Practice name and services, a commencement date backdated to 1 July 2024, what counts as partnership property including the patient list and goodwill, and how the joint lease is released.
2. Capital: A table of contributions, profit shares and monthly drawings for each partner, then capital accounts, the rule that no partner can be forced to contribute more, and interest on partner loans.
3. Profits, losses and drawings: The 40, 40 and 20 split, losses in the same proportions, drawings taken on account of profit, repayment of an overdrawn account, and how partnership tax is handled.
Liability warning: A warning panel spelling out joint and several liability for the whole of a partnership debt, and pointing forward to the insurance clause as the practical answer.
4. How decisions are made: Ordinary operating calls any partner may make alone, six numbered decisions that need all three in writing, and a rule that an approved minute counts as that writing.
5. What each partner must do: Four duties: hold registration and report anything affecting it within 48 hours, work the stated clinical hours, account for any benefit received, and enter every consultation on the day.
6. Outside work and 7. Banking: Teaching and board seats are allowed, clinical work within ten kilometres is not; then two signatures above $5,000 and accounts by 31 October.
8. Admitting a partner: Unanimous consent plus a deed of accession, and a buy in price that is paid to the partners being diluted rather than into the partnership.
9. When a partner leaves: Six months notice, the three events that end a partnership immediately, the valuation formula, the instalment payout, and first refusal before a share is sold outside.
10. Death and incapacity: The partnership continues between the survivors while the estate is paid out, and a long illness steps from a full share to half to nothing across twelve months.
11. Restraint and 12. Insurance: A restraint that cascades through shorter periods and smaller radiuses until one is enforceable, then a four row table of covers with minimum limits and who holds each.
13. Resolving a dispute: Four steps with deadlines: talk within seven days, the accountant within twenty one, mediation within forty five, and court only once those are exhausted.
14 and 15. Ending it, and general: Dissolution by written agreement, the order proceeds are applied in, what happens to clinical records, then governing law and variation.
Schedules and execution: Schedule 1 lists equipment each partner still owns personally, Schedule 2 names the notice addresses and the accountant, then a signature block each.

What makes this document work

The exit is priced years before anyone wants to leave

The value of the practice is the average net profit of the three most recent completed years multiplied by 2.5, plus written down equipment and cash, less liabilities. Multiply by the profit share, add the capital account, pay a third within 60 days and the rest over eight quarters. Nobody negotiates a number while they are angry.

Uneven money and uneven hours are written on the same page

Two partners put in $60,000 and take 40 percent, the third put in $30,000 and takes 20. Clause 5 then sets 32 clinical hours a week for the first two and 16 for the third. The smaller stake and the smaller commitment sit close enough together that neither reads as a slight.

The liability warning has an answer attached to it

A warning panel says plainly that a creditor can recover the whole of a partnership debt from whichever partner can pay it. Twelve clauses later an insurance table sets $20 million of professional indemnity held by each partner individually, $20 million of public liability held by the practice, and seven years of run off cover paid for by whoever leaves.

Questions people ask

What happens if partners never sign a partnership agreement?

The partnership still exists, but the state Partnership Act fills the gaps. That usually means profits split equally whatever each partner contributed, no notice period, and the partnership dissolving when one partner retires, dies or becomes bankrupt. A written agreement is optional in every state, which is exactly why the default rules catch people out.

Does a partnership pay its own income tax?

No. The partnership lodges its own return but pays no income tax on the profit. Each partner declares their share in their personal return and pays their own tax and instalments on it, whether or not the money was actually drawn. Clause 3.5 says so, and adds that no partner is paid a salary and no superannuation is paid for a partner.

Is one partner responsible for debts another partner ran up?

In a general partnership, yes. Partners are jointly and severally liable, so a supplier or a lender can pursue the whole amount from whichever partner has assets, then leave that partner to chase the others. It is the single biggest difference between practising as a partnership and practising through a company.

How much notice should a partner give before leaving?

Long enough for the others to fund the payout and cover the clinical load. This agreement uses six months of written notice for a voluntary retirement, and says the partnership carries on rather than dissolving. Loss of registration, bankruptcy or serious misconduct ends a partnership immediately with no notice at all.

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