How to Create a Business Partnership in the Philippines

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A partnership is defined by the Philippine Civil Code Article 1767 as a contract between two or more persons that agree to contribute money, property, or industry to a shared fund to split the profits among themselves. A partnership is a separate legal entity from that of the members in the partnership.

A partnership differs from a corporation in three ways:

• A partnership turns into a juridical person as soon as the contract begins, while a corporation only turns into a juridical person after registration with the Securities & Exchange Commission (SEC).
• A transfer of partnership from one person to another does not automatically make the transferee a partner, as it will still be subject to approval from all the other partners. This rule does not apply to corporations where transferring the shares of stock to another individual makes the transferee a stockholder of the corporation.
• In a partnership, partners are usually accountable for their personal property, while in corporations, the stockholders are held liable only for the amount of their pledged capital stock.

Advantages of a Partnership in the Philippines

• The requirements for establishing a partnership are considerably fewer in a partnership than in a sole proprietor structure, specifically in drafting the Articles of Partnership.
• The start-up expenses of building a partnership are relatively low compared to establishing a corporation.
• Generally, there is an equal right on how to manage a business.
• Partners share the losses among themselves.
• There are more chances for higher capital from two or more partners when compared to a sole proprietorship structure.
• There is a faster resolution of business concerns due to fewer business owners compared to a corporation setup.
• Partnerships may benefit from bigger loans extended by financial institutions due to the partners’ combined resources compared to sole proprietorships.

Disadvantages of a Partnership in the Philippines

• Due to the unlimited liability of partners in a General Partnership setup, the company may put their personal property and assets at risk. However, in a Limited Partnership setup, some partners are held liable only up to the amount of their capital contribution.
• As a contract between partners, a partnership may easily be dissolved upon incapacity, withdrawal, and death of a partner or for any other causes.

Types of Partnerships in the Philippines

General Partnership

• Partners are held liable indefinitely for the debts and duties of the partnership.

Limited Partnership

• Some partners are held liable indefinitely for the debts and duties of the partnership, while some are held responsible only up to the extent of their capital contributions.

• Partnership name
• Registration with SEC depending on the amount of capital
• Duly notarized Articles of Partnership
• SEC Form F-105 for those with foreign partners
• Registration with BIR
• Registration with government agencies if hiring employees
• After obtaining a Certificate of Registration from SEC, secure permits from the city hall

1. Prepare your partnership documents.
2. Submit accomplished forms and documents to the Securities and Exchange Commission (SEC) for assessment and processing.
3. Show proof of minimum paid capital in your trust account from your local bank.
4. Secure Certificate of Registration from SEC.
5. Secure a Business Permit and Mayor’s License.
6. Complete your registration of licenses and certificates with various government agencies, including City hall, where the partnership is located; BIR, SSS, Philhealth, and Pag-Ibig.

As the first ISO 9001:2008 company in the Philippines to offer business registration services to its clients, Triple i Consulting provides the following services related to establishing a partnership business:

• Drafting a partnership agreement between parties
• Registration of the partnership with the Securities and Exchange Commission (SEC)
• Acquisition of the business permit
• HR and labor consultation
• Workforce recruitment
• Accounting and bookkeeping services
• Payroll processing
• Corporate Compliance

Find out more by contacting us here , filling out the form below, calling us at +63 (02) 8540-9623, or emailing us at info@araraa.com to book an initial consultation with one of our business registration experts.