What is General partnership?

A general partnership in Switzerland, known as “Kollektivgesellschaft” in German or “société en nom collectif” in French, is a legal business structure formed by two or more individuals to conduct commercial activities. Governed by the Swiss Code of Obligations (CO), it is a straightforward and flexible structure, particularly suited for small businesses or professional collaborations.

Key Characteristics of a General Partnership in Switzerland

1. Legal Entity
   While a general partnership is not considered a separate legal entity, it operates under its own name and can enter into contracts, acquire assets, and incur liabilities. However, the partners themselves are jointly and personally liable for the partnership’s obligations.
2. Formation
   A general partnership is established when two or more individuals agree to operate a business together and register the partnership with the Swiss Commercial Register. There are no minimum capital requirements for starting this type of business.
3. Management and Decision-Making
   All partners actively participate in the management of the business unless otherwise agreed. Decisions are typically made collectively, emphasizing collaboration among the partners.
4. Taxation
   General partnerships are not subject to corporate income tax. Instead, profits are distributed among the partners, who are taxed individually based on their share of the earnings.

Advantages and Considerations

The simplicity and low cost of establishing a general partnership make it an attractive option for entrepreneurs starting a business in Switzerland. However, the unlimited personal liability of the partners requires careful consideration, particularly for ventures involving significant financial risk.

General partnerships are ideal for small-scale enterprises or professional collaborations where partners seek active involvement and direct control over business operations while sharing both profits and responsibilities.