Financial Statements for Partnerships in South Africa

Partnerships have no statutory obligation to prepare audited or reviewed financial statements under the Companies Act (which applies only to companies). However, partnerships must maintain adequate accounting records for tax purposes, and each partner needs the partnership's financial information to prepare their individual tax returns.

In practice, most partnerships prepare an income statement and balance sheet at year-end, showing each partner's capital account, drawings, and profit allocation. These financial statements form the basis for each partner's tax return and are essential for monitoring the financial health of the business.

The partnership agreement should specify the accounting obligations — including who is responsible for record-keeping, which accounting policies are used, when financial statements must be prepared, and whether an independent review or audit is required (even if not legally mandated). Banks and lenders will require financial statements when the partnership seeks financing.