Partners in a partnership may make withdrawals from and payments into the business operations at any time. The transparency principle applies. With a partnership, you can therefore balance private and business liquidity requirements without red tape.
In principle, the partners in partnerships have unlimited personal liability for this on a pro rata basis with their own assets. An exception is the limited partnership.
The management of a partnership must be assumed by one of its partners. In the case of a limited partnership, the general partner may also carry out the management. If the general partner is a limited liability company, it is represented by its managing director, who then de facto performs the management of the limited partnership.
Many partnerships do not have to be entered in the commercial register. (An exception is the commercial partnership, which is entered in section “A” of the competent commercial register). This reduces the time and effort required for formation. The preparation of a partnership agreement, in which the relationships between the partners and the company are regulated, is not legally mandatory for partnerships that do not have to be entered in the Commercial Register. Nevertheless, it is advisable to agree on a partnership agreement.
If partnerships do not operate a trade in the narrower sense but, for example, carry out freelance activities, they do not have to register a trade and are thus exempt from the obligation to pay trade tax to the responsible municipality. For the official acceptance of a freelance activity, you must prove that you are practicing a profession. The prerequisite for this is the academic qualification for a profession. For commercial partnerships, there is a turnover allowance, up to which you are exempt from paying trade tax.
Incidentally, in the case of partnerships, each partner individually pays the taxes that accrue to him or her in connection with the partnership on a pro rata basis.
Although partnerships do not act as either a “natural person” or a “legal entity,” they may incur liabilities, acquire rights to property, enter into contracts, and act as plaintiff or defendant in court. For tax purposes, a partnership acts as a separate taxable entity.