Overview of Partnership Firm Registration
There are circumstances where it would not be possible for an entrepreneur alone to arrange for the requisite capital and resources. Further, the nature of business is such that it requires increased supervision and control, division of work, and sharing of risks. This is when a partnership form of business can be undertaken by the entrepreneur.
A partnership is a legally binding agreement between two or more persons to manage and operate a business and share profits. General partnerships, limited partnerships, and limited liability partnerships are the types of partnerships recognized under the Companies and Allied Matters Act (CAMA) 2020.
One of the advantages of a partnership business in Nigeria is that it allows for the sharing of resources, expertise, and capital between partners, which can help to grow the business more quickly. Partnerships are also relatively easy and inexpensive to set up and manage, compared to other types of business structures.
SplashDict is equipped with accredited experts and the necessary resources to assist you to complete the Registration of a Partnership Business in Nigeria.
Benefits of Registering a Partnership Business
Partnership firms have several advantages, including:
1
Legal status
Registering a Partnership Firm with the Corporate Affairs Commission (CAC) provides the organization with legal status, making it easier to enter into contracts, own property, and carry out other legal activities.
2
Easy to start
Partnership firms are relatively easy and inexpensive to start compared to other business structures, such as corporations. They require minimal legal formalities and can be started with a Partnership Deed.
3
Shared risk and responsibility
The risk and responsibility of the business are shared among the partners. This can be advantageous because partners can leverage each other's strengths and skills to manage the business.
4
Access to more capital
With more partners, a partnership firm has access to more capital than a sole proprietorship. Each partner can contribute to the capital of the business, making it easier to raise funds for expansion or other purposes.
5
Flexibility
Partnership firms have more flexibility than corporations in terms of management and decision-making. Partners can make decisions quickly and efficiently without the need for board meetings or shareholder approval.
6
Easy to dissolve
If a partner wants to leave the business, or the partnership firm wants to dissolve, it can be done relatively easily compared to other business structures.
7
Existence of an Agency Relation
All partners or any one partner acting on behalf of others can undertake partnership business. This means each partner is a principal in himself who can act in his own right. Further, he can also act on behalf of other partners by acting as their agent.
8
Duration of the Partnership Firm
The partnership Firm may continue as long as the partners wish to do so. However, as per law, the partnership can come to an end if any of the partners dies, retires, or becomes insolvent. But, the remaining partners can continue doing business under the same name after sorting out the due share of the outgoing partner.
9
Better Management
It is because of the ownership, administration, and profit in the partnership firm that the business can be well managed.
10
Protection of partnership name
Registering your partnership name with the CAC protects it from being used by another business.
11
Open a Business Bank account
You need to provide proof that your Firm is registered with the Corporate Affairs Commission to open a corporate bank account.
12
Access to funding
Registered partnerships are eligible to apply for loans and other funding opportunities that are not available to unregistered businesses.
Choosing a Type of Partnership Business
The choice of the preferred form of partnership largely depends on the purpose for which the partnership is constituted, nature of the relationship that exists between the proposed partners, and the extent to which each partner may want to bear liability for the business.
A general partnership is a business arrangement in which two or more people agree to share all of a company's assets, profits, and financial and legal liabilities. Partners in a general partnership consent to bear unlimited liability, which means they can be sued for business obligations.
Each partner has a right to participate in the management of the company, and each partner must disclose their portion of the company's revenues and losses on their personal tax return.
The corporate entity is not separate from the partners in general partnerships, and the partners are responsible for each other's conduct. The personal assets of the partners are unprotected, and the partnership may be terminated if one of the partners dies or withdraws from the partnership.
A limited partnership (LP) is a type of partnership with at least one general and one limited partner. A general partner's liabilities are unlimited meaning the general partner bears personal liability to the partnership, whereas a limited partner's liabilities are limited unless he participates in the partnership's management.
A limited partnership cannot have more than 20 partners and may have a corporate entity as a partner. The general partner is in charge of the day-to-day operations of the company. The other partners normally contribute capital in exchange for a share of the earnings and do not participate in the partnership's management.
LPs are not taxed as separate entities, but their partners are taxed on their personal income. Real estate investors, hedge funds, investment partnerships, and other businesses commonly employ this company structure.
A Limited Liability Partnership (LLP) is a type of business entity in Nigeria that combines the flexibility of a partnership with the limited liability protection of a corporation.
LLPs in Nigeria must have at least two partners, and there is no limit to the maximum number of partners. The partners can be individuals or corporations, and each partner is only liable for the debts and obligations of the partnership to the extent of their capital contribution.
One of the main advantages of an LLP in Nigeria is that it offers limited liability protection to its partners, which means that their personal assets are protected in the event of business failure. LLPs also offer flexibility in terms of management and decision-making, and partners can share profits and losses in a way that suits their needs.
Partnership Firm Registration Packages
Upon completing the order, you’ll be redirected to submit your information to process your registration.
Limited Partnership is a partnership consisting of a minimum of two partners, with at least one general partner and one limited partner.
LLP is a body corporate with a legal personality separate from its members. It is a hybrid business form that infuses two types of business; a partnership and a limited liability company.
A partnership, also known as a general partnership, is a business structure comprised of two or more owners who agree to share all profits, shares, and liabilities of the business.
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Frequently Asked Questions (FAQs)
You can find some of our most frequently asked questions below;
An unincorporated business structure that two or more parties form and own together is called a partnership. These parties, called partners, may be individuals, corporations, other partnerships, or other legal entities.
Partners may contribute capital, labor, skills, and experience to the business. They may have unlimited legal liability for the actions of the partnership and its partners.
The most common type of partner is a general partner, who actively manages and exercises control over the business operations.
Limited partners have limited legal liability. This type of partner cannot manage or exercise control over the business.
Among the most common types of partnerships are general partnerships (GP), limited partnerships (LP), and limited liability partnerships (LLP).
A partnership can even start without an oral or written contract. Where there is a written contract between the partners, it is called a partnership agreement. The partners agree on the purpose of the partnership and their rights and responsibilities.
Essentially, there are three different types of partnership under Nigerian law:
(a) General partnerships
(b) Limited partnerships
(c) Limited liability partnerships (‘LLPs’)
General partnerships are more commonly simply referred to as ‘partnerships’, albeit that term is also often used generically to refer to all types of partnerships.
“Partnership is the relation which exists between persons carrying on a business in common with a view to profit”.
The existence of a partnership is a matter of fact. The parties cannot simply determine this for themselves. However, the partners will usually enter into a written partnership agreement, which sets out (amongst other matters) the rules relating to the commencement, management and dissolution of the partnership.
It is important to remember that the essence of a partnership is the continuing relationship (personal as well as commercial) between the partners. Any written partnership agreement will only be an indication of the relationship. If a court has to consider whether a partnership exists, it will look at the substance of the arrangements and not the stated intentions of the parties.
A partnership must:
(a) have at least two partners; and
(b) be carried on "with a view to profit". It is the intention to make a profit that is important rather than whether a profit is actually made.
In view of the requirement of an intention to make a profit, charitable or not-for-profit concerns cannot be partnerships. However, they may be able to form partnerships with others.
As with a general partnership, a limited partnership must have at least two partners and be carried on with a view of profit.
A limited partnership is a type of partnership with general partners who have a right to manage the business and limited partners who have no right to manage the business but have only limited liability for its debts.
In view of the requirement of an intention to make a profit, charitable or not-for-profit concerns cannot be limited partnerships. However, they may be able to form limited partnerships with others.
A limited liability partnership is a partnership in which some or all partners have limited liabilities. It therefore can exhibit aspects of both partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner's misconduct or negligence.
A partnership agreement is a contract which sets out the terms and conditions of the relationship between the partners in the relevant partnership. Where it relates to a limited partnership, it will be called a limited partnership agreement and where it relates to an LLP, it will be called a limited liability partnership agreement (or LLP agreement).
A partnership agreement will set out the terms and conditions of the contract agreed between the partners. In most cases, it will be able to override the default provisions contained in the legislation relating to the relevant type of partnership.
Even where the partnership is a straightforward relationship between two partners who share everything equally, a partnership agreement should be prepared. This includes situations where close family members or friends are establishing a partnership. Ideally, the partnership business relationship will continue amicably without dispute or other problems. However, disagreements may occur. In such circumstances, it is useful to have a clearly written partnership agreement setting out the terms and conditions of the partnership (including any dispute resolution provisions) to help the partners to resolve any conflict quickly and efficiently.
This depends on which type of partnership is being established.
An LLP is a body corporate with a separate legal personality from that of its partners. However, neither general partnerships nor limited partnerships have a separate legal personality from their partners.
Separate legal capacity carries several advantages including the ability for the legal entity to hold assets in its own name, create charges over its assets, and enter into contracts in its own name. It also usually has the effect of limiting the liability of its owners.
This depends on which type of partnership is being established.
As an LLP has a separate legal personality from its partners, it can do anything that a natural person can do. This includes entering into contracts in it’s own name.
General partnerships and limited partnerships do not have a separate legal personality from their partners. Accordingly, they cannot enter into contracts in their own names.
In the case of a general partnership, the partners will act as agents of the partnership and have wide authority to bind the partnership.
In the case of a limited partnership, the general partners will act as agents of the partnership and have wide authority to bind the limited partnership. However, a limited partner is unable to enter into contracts on behalf of the limited partnership.
It is common practice for partnership agreements to include contractual provisions relating to the management of the partnership, which may include provisions relating to the ability of partners to enter into contracts on behalf of the relevant partnership (whether it is a general partnership, limited partnership or LLP).
The limited liability status of any partner in a partnership will vary depending on which type of partnership is being used and, in some cases, the category of partner.
(a) General partnership – All partners in a general partnership have unlimited liability.
(b) Limited partnership – All general partners in a limited partnership have unlimited liability. The liability of all limited partners in a limited partnership is limited. Limited partners are required to contribute capital or property to the limited partnership. They do not take an active role in the management or operation of the limited partnership. Any limited partner who takes an active role loses its limited liability.
As a consequence of these rules, the general partner in a limited partnership is often a private limited company or other limited liability entity.
(c) LLP – All partners have limited liability. There are, however, some exceptions to this rule.
The partners in each form of partnership will usually enter into a written partnership agreement, which may include rules relating to partner capital contributions and other payments to the partnership in specified circumstances.
It usually takes 3-14 business days for the Partnership Registration in Nigeria.
Name Search: 6 - 24 hours from submission.
Grant of Certificate of Registration: 2 - 10 Days from filing.
Total time: Approximately 3 - 14 days.
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