The società in nome collettivo (SNC, general partnership) is one of the business structures chosen by people opening a small or medium-sized business in Italy. It is a partnership of individuals, with a simple structure and relatively low costs, used to start a family business or where trust between partners is central.
In an SNC the owners have unlimited and joint liability, and this is a key point: if the company does not pay, creditors go to the partners to recover what is owed, drawing on their personal assets as well.
How do you set up an SNC? What are the costs and how does taxation work? And what are the legal obligations (one above all: a business account, yes or no)? Let us find out.
Contents
What a general partnership is
The SNC is a partnership of individuals in which all partners are liable, with their own capital and their own assets, for the company’s obligations. It has a registered office, a name (company name) and two or more partners who are all managers (to be clear, a single-member SNC does not exist). It is set up with a public deed or a private agreement drawn up by a notary, which contains the corporate purpose and the management arrangements.
The law does not grant the SNC legal personality and does not require a minimum capital to open, as happens with capital companies. A general partnership is also not public, which means it is not required to publish financial statements. On top of that, there is no clear separation between the company’s assets and the partners’ personal assets.
The partners of an SNC
In an SNC there are both partners who contribute capital and working partners, who offer labour, professional skills or services. All of them have the right to share in the profits, according to the rules set out in the deed of incorporation.
Unless otherwise agreed, all partners have the right and the duty to manage the company. Any non-managing partners still enjoy broad rights to information and oversight. Profits and losses are divided on the basis of the shares or, failing any other arrangement, in equal parts.
Liability
The key point of the SNC is the owners’ liability, which by definition is:
In the event of default, a creditor can demand their money back by going after the company’s assets first and then, if those are not enough, the personal assets of one or more partners. In an SNC the entrepreneurs really do risk everything, so it is often a legal form chosen between people with family ties or close trust, where everything is shared and the terms are accepted by all.
Differences with a sole proprietorship, S.a.s. or S.r.l.
Compared with a sole proprietorship, the SNC offers a more structured dimension and the possibility of sharing management with other partners. The partnership, however, cannot access the flat-rate tax scheme and has higher accounting obligations. The risks to personal assets remain similar: the sole trader, like the SNC partner, has unlimited liability.
In the limited partnership (società in accomandita semplice, S.a.s.), by contrast, there are two types of partners: general partners (accomandatari), who are operational and have unlimited liability, and limited partners (accomandanti), who are simply capital partners with limited liability. The SNC makes no such distinction: all partners are liable without limit in the same way.
The comparison is different again with the S.r.l. (limited liability company), a capital company where the partners’ liability is limited to the capital invested. Here the partner is protected and, in the event of failure, loses only the share of capital they paid in.
If you are looking for asset protection, an S.r.l. is the better option; if instead you are looking for speed and lower costs, an SNC is the better choice.
How to open an SNC
To set up an SNC you first need to choose the company name, that is, the name of the business. It must be unique (different from every other existing company), include at least the name of one partner and show the legal form, for example “Rossi & Bianchi s.n.c.”.
You will then need a deed of incorporation, which can be prepared by a notary as a public deed or signed by all the partners but authenticated by the notary. The SNC’s deed of incorporation must state:
In addition to the deed, you also need a statute, a document that governs how the company works, the management arrangements, the partners’ powers, the conditions for withdrawal, the rules in the event of a partner’s death and the dissolution procedures.
Once the notary draws up or receives the material and the partners sign, the Comunicazione Unica (Single Communication) is sent electronically to the Business Register, a single filing that requests:
The other requirements for getting started include:
A final requirement could be the business current account, and here a clarification is needed.
Business current account for an SNC
An SNC is not required by law to have a business current account if turnover stays below €400,000 a year. Even though it is not mandatory, it is strongly recommended to open an account dedicated to the business, so as to keep transparent accounting and separate business finances from personal ones.
On top of that, once turnover exceeds €400,000, having a dedicated account becomes a legal obligation, so why not be ready from the start? Today there are business accounts, like Vivid Money, that are fully digital and offer solutions well suited to partnerships:
Set up your finances from day one. Open your Vivid business account and take advantage of features built for modern partnerships: no monthly fee, instant transfers and smart tools to grow your business.
Setup costs and annual costs
The costs of opening an SNC are generally lower than those of capital companies.
Setup expenses
Between notary fees, stamp duty, Business Register fees, digital tools (PEC, digital signature, invoicing software) and the accountant, the startup cost ranges on average between €1,500 and €2,500.
Variable costs
The big variable is the running costs. Every year an SNC must pay:
The costs obviously rise as the number of partners, employees and annual transactions increases. SNCs with turnover up to €400,000 (for the provision of services) or up to €700,000 (in other cases) can access simplified accounting and reduce their accounting burden.
Taxes and duties
The SNC uses the transparency regime: it is not the company that is taxed, but the individual partners on their percentage of profits, with progressive IRPEF (personal income tax) rates based on the personal income bracket. Taxes are therefore paid regardless of the actual distribution of profits: what counts is the income that appears on paper.
In addition to IRPEF, the general partnership is subject to IRAP, the Imposta Regionale sulle Attività Produttive (regional tax on productive activities). The average rate is around 3.9%, but it can vary slightly from one region to another.
Social security contributions
Every working partner must enrol in the INPS Artisans and Merchants scheme (Gestione Artigiani e Commercianti), and is therefore required to pay a mandatory minimum contribution in four instalments plus a variable share on profits.
The fixed amount is updated by INPS every year, while on income above the minimum a variable percentage is paid, with bands updated annually (everything is published on the INPS website). Contributions are due from all partners, including working partners.
Closing an SNC
An SNC can be dissolved for various reasons, including:
If there are no debts, the company is closed by requesting removal from the Business Register and dividing the remaining assets directly. The Agenzia delle Entrate (Revenue Agency), INPS and INAIL are informed through the Comunicazione Unica (Single Communication), as at the opening stage.
If instead there are debts, the liquidation phase must be started. A liquidator is appointed, who can be a professional or one of the partners, tasked with collecting the receivables, paying the debts, returning to the partners what remains in proportion to their shares and requesting removal from the Business Register.
Withdrawal, death and succession of partners
If a partner wants to leave the company, the rules are to be found in the deed of incorporation or in the statute. Failing that, the agreement of the others or legitimate grounds are needed. In the event of a partner’s death, the share can pass to the heirs only if provided for in the partnership agreements or with the agreement of the other partners.
Otherwise, the SNC can be dissolved or proceed to liquidate the deceased partner’s share.
Advantages and disadvantages of an SNC
The strengths of the SNC are the low setup costs, running costs and administrative costs, and simplified accounting obligations. In most cases these businesses use simplified accounting; then, as volumes grow, it may become necessary to move to ordinary accounting. But at that point it makes sense to move to a more complex corporate type, such as an S.r.l.
The main disadvantage is having no asset protection: in the event of default or insolvency, the partners can face personal bankruptcy. The requirement for all partners to enrol in the INPS Artisans and Merchants scheme can also be inconvenient in certain cases: for non-working capital partners of an S.r.l., and for limited partners of an S.a.s., this requirement does not apply.
When does an SNC make sense?
A general partnership is a good legal form when:
The SNC suits traditional professions, craft businesses or small commercial operations. If the activity has growth prospects, external investment, significant financial risk or several passive partners, an S.r.l. could offer far more protection for personal assets.
Frequently asked questions
Who can manage an SNC?
A general partnership can be managed by all the partners, unless agreed otherwise within the statute.
How are profits divided in an SNC?
The profits of a general partnership are shared based on the partners’ shares, or in equal parts if not indicated otherwise.
What does a working partner risk?
Every partner in an SNC has unlimited and joint liability like all the others. If the company takes on debts it cannot repay, creditors can also go after their personal assets.
How much does it cost to maintain an SNC each year?
Between the chamber of commerce fee, the accountant, INPS and other expenses, an SNC can cost at least €6,000-8,000 with two partners. To this figure you have to add the variable costs as the number of partners and the activity grow.
Is it better to choose an SNC or an S.r.l. for a small business?
The choice depends on the type of business, the relationship with the partners, growth expectations, the need for investors and other personal considerations. In general, as turnover and the complexity of the business grow, it makes sense to structure the business as a capital company (S.r.l.) and leave the SNC behind.
How do you exit an SNC?
The ways a partner can exit depend on the rules set by the company in the statute. Leaving an indebted business does not free you from liability for debts incurred up to the moment of exit.
What happens if an SNC partner dies?
In the absence of clauses, the company is dissolved or the share can pass to the heirs subject to the consent of the other partners.
