Becoming a partner in a law firm is one of those career-defining moments. It’s the recognition of years of hard work, trust and leadership, and it marks the start of a new chapter in your professional life.
But behind the congratulatory emails and champagne toasts sits a side of partnership that’s rarely discussed: the financial shift. When you become a partner, you don’t just earn more. You start operating like a business owner. That changes everything from how you pay tax to how you plan for super and protect your income.
Here’s what every new or soon-to-be partner should know before taking the leap.
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You’re No Longer on PAYG
For years, your tax has been handled for you. You receive a payslip, the firm withholds PAYG tax and your only job is to lodge your annual return. That changes the moment you become a partner.
Your income will usually come through a partnership distribution, trust or company structure. This means you are now responsible for setting aside your own tax, managing BAS obligations and paying quarterly instalments.
It’s one of the biggest adjustments for new partners and can come as a shock when the first tax bill arrives. An accountant who understands professional practice structures can forecast your cash position and make sure your tax is managed proactively, not reactively.
Cash Flow Takes Centre Stage
As an employee, your income was predictable. As a partner, your earnings are tied to the firm’s profitability, client payments and overall performance. That is why financial visibility becomes so important.
Accurate bookkeeping isn’t just admin. It is the foundation for understanding how your practice is performing and when cash is available for drawings. Real-time reconciliations, automated billing and integrated systems like LEAP or Actionstep help you stay on top of inflows and outflows without manual effort.
Our bookkeeping specialists at Carbon work closely with legal practices to build clear, consistent reporting that takes the guesswork out of partnership finances. When your numbers are accurate, your decisions are sharper.
Superannuation Becomes Your Responsibility
Another big change is super. As a partner, you are now responsible for making your own contributions and it is easy to overlook when you are focused on growing your practice.
Super remains one of the most tax-effective ways to build long-term wealth. Setting up automated contributions, reviewing your fund’s investment mix and making sure you are on track to maximise your concessional cap are smart early moves. A financial adviser can help you find the right balance between reinvesting in your firm and investing in your future.
Protecting What You’ve Built
Partnership also brings greater financial responsibility and more to protect. It is time to think beyond professional indemnity insurance and consider cover that protects you personally.
Income protection, life insurance and total and permanent disability (TPD) and other risk insurances become especially important once your income depends on the firm’s success. The right cover gives peace of mind that if something unexpected happens, your financial security and your family’s future are protected.
Choosing the Right Structure
Not all partnerships are the same. Some firms bring on salaried partners, others offer equity arrangements, and many use hybrid models. The right setup can make a big difference to your tax position, liability exposure and long-term wealth planning.
Getting professional advice early helps you avoid costly mistakes later, whether that is around income splitting, GST registration or future succession planning. Our Accounting and Wealth teams work together to help partners set up correctly from the start and plan for what is next.
Stepping Up with Confidence
Becoming a partner should be exciting, not overwhelming. With the right advice and systems in place, you can enjoy the rewards of partnership without the stress of surprise tax bills or cash flow uncertainty.
We support lawyers and law firms through every stage of their financial journey, from bookkeeping and tax to wealth creation and insurance. We have helped partners across Australia simplify their finances, gain better visibility and plan for long-term success.
Ready to take the next step?
Speak to Carbon’s Accounting, Bookkeeping and Wealth specialists today to build your financial strategy for partnership and beyond.
