S.a.s.: how it works, costs, pros and cons

The società in accomandita semplice (S.a.s., the Italian limited partnership) is a widely used type of partnership. Its rules are clear-cut: two types of partners, two different types of liability, and two conditions to meet so the company is not closed down or stripped of its benefits.

It is easy to set up, running costs are low, and the risk usually sits mostly with a single type of partner. If you want to understand everything about the limited partnership, down to the smaller details (Do you need a business account? What happens if the S.a.s. fails?), this guide is for you.

Contents

What an S.a.s. is

The società in accomandita semplice (S.a.s.) is one of the main legal forms of business in the partnership category, alongside the società semplice (S.s., simple partnership) and the società in nome collettivo (S.n.c., general partnership).

An S.a.s. does not have legal personality, nor perfect asset separation, but it offers flexibility in managing the business and in capital contributions. The company name (ragione sociale) must include the name of at least one general partner (socio accomandatario).

To start one you need at least two partners, and each must take on a different role: general partner (accomandatario) or limited partner (accomandante). Article 2313 of the Civil Code sets out their different liabilities: general partners are jointly and unlimitedly liable for the company’s obligations, while limited partners are liable only up to the capital they contributed.

Pros and cons

Let’s start with the positives. The limited partnership offers flexibility in the mix of roles and contributions, which can take the form of cash, assets, receivables, or intellectual and manual services.

There is no minimum required share capital, and it does not have to file financial statements each year. Within certain limits it can use simplified accounting, and setting up a new S.a.s. is fairly straightforward.

But the real advantage is the limited liability held by one type of partner, the limited partners, who are effectively protected in the event of financial trouble.

On the other hand, general partners are exposed to bankruptcy with all of their personal assets, and this can still be a drawback. Another limit of the S.a.s. can be the requirement that limited and general partners coexist: if two entrepreneurs want to go into business together and both work actively, they cannot choose to open an S.a.s.

General and limited partners

An S.a.s. must always be led by at least two figures:

Roles

The general partner is the one who administers, manages and represents the company. The limited partner, by contrast, is the one who takes part by contributing capital, but without any management power.

Every operational decision of an S.a.s. rests with the general partners, while limited partners cannot conduct business in the company’s name, unless they receive a special power of attorney for a specific matter.

Limited partners do, however, have certain rights, for example:

Liability

This difference is fundamental, because liability follows from active (or passive) involvement in the company’s business.

The general partner, administrator and representative of the S.a.s., is unlimitedly liable for the company’s obligations. This means that, if the business fails, they will have to answer with all of their personal assets if necessary.

In practice, the general partner of an S.a.s. has the same liabilities as the partners of a società in nome collettivo (S.n.c., general partnership).

The limited partner, on the other hand, has limited liability, meaning their obligations towards company debts never exceed what they paid in. This is the advantage an entrepreneur has as a shareholder in a capital company (S.r.l., S.r.l.s., S.p.A.): in the event of financial distress, their personal assets cannot be pursued by creditors.

Obligations

It is very important in an S.a.s. that the partners’ roles stay clearly distinct. A limited partner cannot be an active part of the business, either as an owner or as an employee: they would breach the prohibition on interference (divieto di immistione), that is, the duty not to interfere, and would lose their right to limited liability.

Another detail that matters is the company name. If the name of the S.a.s. also includes the name of a limited partner, that partner becomes unlimitedly and jointly liable for the company’s debts, just like the general partners.

Finally, an S.a.s. exists as long as there are at least two partners, one general and one limited. If one of the two categories of partner is missing and no replacement is found within six months, the company is dissolved.

How to open an S.a.s.

To open a limited partnership you need at least two figures: a general partner and a limited partner. The owners must prepare a notarised private agreement, or a public deed signed before a notary, and a company statute.

The statute of an S.a.s. must include:

You also need a certified email (PEC) mailbox, an electronic signature, a digital identity (SPID) and e-invoicing software, all tools required to handle the company’s documents.

The founding deed and statute are sent by PEC to the Business Register (Registro delle Imprese) through the Single Communication (Comunicazione Unica), an all-in-one procedure that also lets you obtain:

Business current account

The S.a.s. can open a business current account to manage company finances and to receive capital contributions or profits. The law requires a partnership to have a dedicated business account only if annual turnover exceeds 400,000 euros.

In practice, though, a dedicated company account is almost always essential. Anti-money laundering rules and tax operations themselves make it advisable to keep personal cash flows separate from those of the business.

Without a business account, the bookkeeping becomes confusing and you run the risk of making mistakes. In the eyes of the Revenue Agency (Agenzia delle Entrate) too, unclear handling of financial flows can cause problems during audits, deductions and tax reliefs.

Vivid Money has the business current account tailored to your S.a.s.: an Italian IBAN, payment cards with cashback, SEPA and SWIFT transfers, interest on your balance, investment tools, integration with accounting software, and much more.

Setup and management costs

The costs of starting an S.a.s. vary, but they centre on a few specific items. You need notary fees for the deed, which on average cost around 2,000 euros depending on the professional and the complexity of the deed, while the registration tax is about 200 euros.

Opening a business account can cost on average another 100 euros, although Vivid Money also has a business pricing plan with no monthly fee (you can compare the prices here).

Running an S.a.s. means carrying few fixed costs. The company can opt for simplified accounting if revenue does not exceed 400,000 euros for services or 700,000 euros for other activities, which can ease administration, cut red tape and lower annual costs compared with ordinary accounting.

Bonus tip: to save time on repetitive tasks, many companies choose to automate processes with tools such as Vivid’s digital employees.

Taxation

The S.a.s. is not required to file public annual financial statements, but it must submit an income tax return every year. The business uses pass-through taxation (tassazione per trasparenza): each year, the company’s income is allocated to the partners in proportion to their shareholding.

The partners individually declare their share in their tax return and pay IRPEF (personal income tax) according to their bracket. In other words, the partners pay tax based on their personal rate, not on the rate that applies to capital companies.

The S.a.s. is also subject to IRAP (the regional tax on productive activities), which corresponds to about 3.9% of profit.

INPS contributions

The general partner is always required to register with the INPS Artisans and Merchants scheme (Gestione Artigiani e Commercianti), regardless of their shareholding or whether they also have an external salaried job. They must pay fixed social security contributions four times a year, and variable contributions when paying the tax advance and final balance.

The limited partner, on the other hand, is not required to register with INPS or to pay contributions on their shareholding, unless they are operationally involved in the company. In that case, however, the benefits of limited liability are lost.

When it is worth keeping an S.a.s.

The limited partnership is a solution often chosen in settings built on trust and in family-run activities or those with few partners. My own family’s business, for example, is exactly an S.a.s.: my father, who runs the business, is the general partner, and my mother is a limited partner with no active role inside it.

The S.a.s. is a good solution for its management simplicity, especially for startups and traditional activities that do not involve major financial risk. Having both limited and general partners offers a particular balance between those who invest and those who manage.

S.a.s. or S.n.c.?

Compared with the S.n.c., the S.a.s. lets you bring in investors who risk only their capital. In the S.a.s., the limited partner can stay entirely outside management and keep the liability limited by law. The general partner, instead, has the same rights and duties as the partners of a general partnership.

S.a.s. or S.r.l.?

Compared with the S.r.l., the S.a.s. costs less both to set up and to run, and allows simplified accounting. The limited liability company, however, protects all partners from personal risk and offers more flexibility in how the share capital is split. Its setup and running costs are higher, as is the paperwork, but it offers a greater level of protection, for everyone.

When business volumes grow, the need to protect personal assets becomes more pressing, and an S.a.s. can be converted into an S.r.l.

Dissolution, bankruptcy and the death of a partner

An S.a.s. can be dissolved in a few circumstances:

In the absence of at least one limited partner and one general partner, the S.a.s. has six months to find replacements, otherwise it is dissolved automatically.

If the S.a.s. goes bankrupt, creditors can act directly against the personal assets of the general partners, while limited partners can lose only the share they have invested. During winding-up, creditors are entitled to claim against the liquidation share received by the limited partners too.

If a general partner dies, their share is paid out to the heirs, unless the statute or the founding deed states otherwise. The heirs taking over as new general partners depends on the consent of the other partners. If no new general partner is found, the company is dissolved.

A limited partner’s shareholding can be transferred on death or assigned, with the consent of the partners who hold the majority of the capital. The same applies to replacement on the death of a general partner: the share does not pass on automatically, but is paid out to the heirs, unless the statute provides otherwise.

Non-bankruptable S.a.s.

Some limited partnerships can be declared non-bankruptable. This happens when an S.a.s. is not considered commercially significant, that is, if over the last three financial years it has not exceeded at least one of these thresholds:

In this case the company cannot be declared bankrupt by the court, so it will not be subject to insolvency proceedings. The assets of the general partners, however, can still be pursued by creditors up to the amount of the company debt.