A civil law partnership has its pros and cons

A civil law partnership may be established by at least two people. They are committed to achieving a common economic goal. In order to be able to do so, they contribute their contributions to the company. This is a popular form of collaboration. If you are considering whether to take it, learn about the advantages and disadvantages of a civil law partnership.

Civil law partnership - advantages

A civil law partnership is considered to be the simplest and cheapest way to run a joint business. Its assumption is quick and the handling is uncomplicated. The basis of the activity is an agreement that defines the goal of the hosts and how to achieve it. The great freedom in terms of the provisions of the contract may also be an advantage.

Another advantage is that there is no minimum initial capital required for a partnership. Moreover, a civil law partnership does not pay a separate income tax. Single partners are taxpayers.

Civil law partnership - disadvantages

The biggest disadvantage of a civil law partnership is the lack of legal personality. A civil law partnership may not perform any legal actions on its behalf. This means that it cannot, for example, acquire property. Partners can do it. In such situations, they are the subjects of the legal relationship.

Another threat is the very broad liability of partners. As part of the activity in a civil law partnership, partners are jointly and severally liable for the company's obligations. What is the conclusion? The partners are responsible for their obligations with all their personal assets. It may happen that the partner will incur debts, which you will have to pay later. Moreover, the bailiff may seize the company's bank account, preventing the partners from withdrawing funds and thus from running their business.

The activity of a civil law partnership requires the trust of partners. As long as the relationship between them is correct, everything is fine. However, if there is a conflict between the partners, there may be problems with solving the problems, as there are no detailed legal regulations in this matter.

How to set up a civil law partnership?

You already know the advantages and disadvantages of a civil law partnership, if you are still interested in this form of cooperation, see how to set up a company step by step.

1. Application for running a business in the Central Register and Information on Economic Activity. The civil law partnership has no legal personality. Each of the partners must register with CEIDG himself to obtain the status of an entrepreneur.

2. The next step is to regulate the issue of social security and obtain a tax identification number (NIP).

3. The company should also have a bank account.

The basis for the operation of a civil law partnership is an agreement concluded between the partners. It must be in writing. Any changes to the contract should also be regulated in writing. As previously emphasized, partners are jointly and severally liable under the operation of a civil law partnership.