Makes sense
Low-risk service businesses, between partners with a well-established relationship of trust, with profits drawn in full and modest personal incomes.
Businesses · Company forms
SNC and SAS partnerships
They cost little, can be set up quickly and are transparent for tax purposes. In return they ask for something not everyone is willing to give: the personal and unlimited liability of the partners for the debts of the partnership.
01 · The two forms
What sets an SNC partnership apart from an SAS
Both are partnerships and they share almost everything: formation, taxation, contributions, compliance. The difference lies in the structure of liability.
In an SNC (società in nome collettivo, a general partnership) all partners are jointly and severally liable without limit for the obligations of the partnership, and all normally have management powers.
In an SAS (società in accomandita semplice, a limited partnership) two categories coexist: the accomandatari (general partners), who manage and are liable without limit, and the accomandanti (limited partners), who are liable only up to the share they contributed but cannot carry out acts of management.
The SAS is the form that lets a partner contribute capital without exposing their personal assets. But a limited partner who interferes in the management loses the benefit of limited liability: it is a rule applied in practice, not just on paper.
02 · The central point
What unlimited liability means
It means that the partnership's creditors, once its assets are exhausted, can go after the personal assets of the partners with unlimited liability: bank accounts, property, salaries.
- Liability is joint and several: each partner can be called upon for the whole amount, and can then seek recovery from the others.
- It is secondary: the creditor must first pursue the partnership's assets, but this prior-enforcement benefit has practical limits.
- A partner who joins is also liable for obligations that arose before they joined.
- A partner who leaves remains liable for obligations that arose before the relationship ended.
- Liability also covers the partnership's tax and social security debts.
When unlimited liability really weighs
Not every business carries the same risk.
- Businesses with stock and supplies on credit
- Sectors with a risk of disputes with customers
- Bank credit lines and leasing
- Businesses with employees, and so with liabilities linked to employment
03 · The tax regime
Pass-through taxation
A partnership does not pay income tax. The income it produces is attributed to the partners in proportion to their profit shares, and each partner declares it together with their other income.
The income is attributed regardless of distribution: the partner is taxed on their share of income even if that profit stays in the partnership and is not drawn.
| Aspect | Partnership | Limited company |
|---|---|---|
| Income tax on the entity | None: pass-through | IRES (corporate income tax) on the income produced |
| Taxation of profit for the partner | Always, even if not distributed | Only if distributed, as a dividend |
| Rate | Progressive, added to the partner's other income | Flat rate paid by the company |
| Losses | Attributed to the partners and usable under the rules | Stay with the company |
| IRAP (regional tax on productive activities) | Due under the general rules | Due under the general rules |
| Separation of assets | Imperfect | Complete |
Pass-through taxation is an advantage when the partners' incomes are modest, because it avoids double taxation. It becomes a problem when profit is high and the partners would like to leave it in the business: tax is due on the whole amount anyway, as if it had been drawn.
04 · Social security
The partners' contributions
Every partner who works in the partnership on a habitual and predominant basis must register with the social security scheme that corresponds to the activity carried out.
- The contribution base is the share of business income attributed to the partner, not the profit drawn.
- The contributions for artisans or traders of INPS (the Italian social security institute) apply, with the fixed component due even on zero income.
- A limited partner who does not work there is not required to register, consistent with the ban on interfering in management.
- A partner who also works elsewhere as an employee still has to register if the work in the partnership is habitual and predominant.
- Contributions are paid regardless of the distribution of profits, as with taxation.
Pass-through taxation combined with contributions on the income attributed produces an effect that surprises many: you pay tax and contributions on money that has stayed in the business. Financial planning must take this into account.
05 · How to set one up
Setting up an SNC or SAS partnership
Formation is simpler than for an SRL (limited liability company) and noticeably cheaper, but it still requires a notarial deed or an authenticated private agreement.
Deed of formation
Drawn up by the notary, it contains the firm name, the business purpose, the contributions, the profit shares and the management powers.
Registration and filing
Registration of the deed and entry in the Registro Imprese (the Companies Register), which makes the partnership and the partners' powers public.
Tax and social security positions
Partita IVA (Italian VAT number), INPS registration of the working partners, an INAIL position (workplace accident insurance) where needed.
Start-up steps
SCIA (certified notice of start of activity) or permits for the activities that need them, a PEC address (Italian certified email), opening the partnership bank account.
There is no minimum capital, but contributions must be stated and must be consistent with the business. A partnership with no capital of its own runs into difficulties with banks and suppliers from the start.
06 · The comparison
When a partnership makes sense
The comparison with the SRL has no single answer. These are the profiles where a partnership remains the right choice, and those where it does not.
Makes sense
Continuing a family business already under way, where the structure is established and the risk is known and limited.
Does not make sense
Businesses with significant debt exposure, stock, employees, or a risk of disputes with customers.
Does not make sense
Projects that expect investors to come in or rapid growth: the SRL is the form the market expects.
Needs assessing
High profits you want to reinvest: pass-through taxation taxes them in the hands of the partners anyway.
Needs assessing
The SAS as a structure to separate whoever puts in the capital from whoever manages, subject to the ban on interference.
Frequently asked
The questions that keep coming up
Can a limited partner work in the partnership?
They can work within the partnership, but they cannot carry out acts of management or negotiate or conclude business in the name of the partnership without a special power of attorney for individual transactions.
Breaching the ban means losing the benefit of limited liability towards all the partnership's creditors, not only for the transaction concerned.
Can an SNC be converted into an SRL?
Yes, conversion is an ordinary and frequent operation, typically when the business grows and unlimited liability becomes unsustainable.
It requires a notarial deed, a formal valuation report on the assets and an assessment of the tax effects. It needs planning, but there are no obstacles in principle.
If the partnership does not distribute profits, do I still have to pay tax?
Yes. Pass-through taxation attributes the income to the partners in proportion to their profit shares, regardless of whether it is actually distributed.
That is why, in partnerships, attributing the income is almost always accompanied by a distribution at least equal to the taxes that result from it.
How much does it cost to run an SNC compared with an SRL?
Less, mainly because there is no requirement to file financial statements in the form required for limited companies, and the company compliance structure is lighter.
The gap has, however, narrowed over time. Today the liability profile weighs much more in the choice than running costs do.
Let's talk
You choose the company form by looking at the risk, not only the costs
A business with few debts and secure margins is one thing. One with stock, suppliers and bank credit lines is another.