Is fantasy personal collective or both
General partnership (KIG) - What is a general partnership?
The general partnership is a Swiss form of company. At least two people join forces to run a company.
You only understand train station? We are happy to help with an overview of the topic of corporate form.
The general partnership falls under the category of partnerships. It has no legal personality of its own, so it is not a legal person. However, it acts in legal transactions under its own name and can thus, for example, acquire rights or enter into liabilities.
For whom does the establishment of a general partnership make sense?
The general partnership is particularly suitable for small companies whose shareholders have strong personal and professional relationships with one another. The general partnership enables the joint exercise of a freelance activity as a commercial enterprise.
A concrete example: Lisa and Marie have known each other since school, are both qualified translators and would like to run a translation agency as equal partners. They enjoy working together and the translation agency is a dream come true for both of them. Therefore, they are also prepared to be personally liable for the company in solidarity. You decide on the legal form of a general partnership.
General partnership - this is how it works
A general partnership is founded and managed by two or more natural persons who are recognized as self-employed. These act as shareholders.
The official foundation
The establishment takes place through the obligatory entry in the commercial register. The conclusion of a articles of association is not absolutely necessary, but it is strongly recommended! This is because it regulates, among other things, the business shares and profit sharing.
The financial requirements
There are no minimum capital requirements to set up a general partnership. The start-up costs usually amount to CHF 1,250 - 4,000 (depending on the provider and the individual needs of the founders). They mainly include:
- professional advice,
- the notary fees for the articles of association as well
- the entry in the commercial register
The company name
The company name can be freely chosen when founding a general partnership, unless it already exists in Switzerland. It can be, for example, a personal name or an imaginary name. The addition “general partnership” or its abbreviation “KlG” must be included in the name.
Liability and risk in a general partnership
One should be aware that forming a general partnership involves certain risks for the shareholders. In the event of debts, the company's assets are liable first and then the shareholders with their personal assets.
This liability is unlimited and jointly and severally and applies up to five years after the dissolution of the company. Solidarity liability means that each partner has to pay for all debts if necessary.
General partnership - does the accounting requirement apply?
The accounting obligation also for general partnerships depends on the annual turnover. If this is less than CHF 500,000, only simplified bookkeeping needs to be kept. This includes a simple income and expenditure account (also known as a “milk booklet account”) as well as the financial position.
If you have a turnover of CHF 500,000 or more, you also have to keep double bookkeeping in a general partnership. This requires, among other things, the creation of a balance sheet.
General partnership - is one liable for tax?
The general partnership as a company is not subject to tax. But the individual shareholders are taxed directly on their income and assets. This is done via the private tax return of the respective shareholder.
Advantages and disadvantages of the general partnership
Advantages of the general partnership
- no minimum capital required
- low start-up costs
- relatively easy start-up process
- simple corporate structure (no organs, such as a managing director, have to be determined.)
- protected company name (in Switzerland)
- No double taxation
Disadvantages of the general partnership
- Due to the unlimited, joint and several liability, the shareholders are dependent on each other.
- It is often difficult to secure support from investors or outside capital. It depends heavily on the personal creditworthiness of the shareholders and the risk of the activity.
- If there are several equal partners, it is easy to disagree on business decisions.
A high level of trust between the shareholders and the conviction that the joint project can be successful is therefore particularly important.
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