Going into business with a friend, the simplest structure is a partnership. 

Using your two individuals names, all you need to do is register through the Australian Business Register(www.abr.gov.au) and apply for a:

• Australian Business Number
• Tax File Number
• Goods and Services Tax, if needed (sales are over $75k per annum)

If you would like to use a business name you will need to register the name with ASIC (www.asic.gov.au)

Please note the partnership does not pay income tax.  The individual partners pay the tax on their share of the partnership profit. Make sure you put some money aside for your income tax, now you are self employed you don't have an employer withholding PAYG for you.  It can be quite a shock having a large tax bill at the end of the year and no money saved up to pay for it.

Being a partner in a partnership, there is no legal requirement to pay superannuation for yourself.  Make sure you try to put some profit aside for your super.

The best part of having a business partner is someone else has a vested interest in your success.  The worst part can be having a business partner who acts in their own best interest and not the partnership's success.

Before starting a partnership, create an agreement with each other.  This agreement should list the individual business partners responsibilities and your expectations of each other. It will also have a plan on how to end the partnership.

There are pros and cons, but the essential element to a successful business partnership is open communication.