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Partnership
Two or more people — or companies — contribute money, property or skill and divide the profits on terms you write yourselves in a notarised Articles of Partnership.
At a glance
Owners
Two or more partners
Personal liability
Unlimited for general partners
Income tax
Corporate rates; professional partnerships taxed at partner level
Typical set-up
4–6 weeks
Two kinds
Decide who is exposed before you draft anything
General partnership
Every partner manages the firm and every partner is personally liable for all of its debts — jointly and solidarily, meaning a creditor can pursue any one of you for the whole amount.
Limited partnership
At least one general partner runs the business and carries unlimited liability; limited partners put in capital, stay out of management, and risk only what they contributed. The name must carry “Ltd.”
What you need
Six steps, and one document that matters most
The Articles of Partnership is where nearly every future dispute is either prevented or created.
SEC name reservation
Verified and reserved through the SEC before anything is drafted, so the articles carry a name that will actually be approved.
Articles of Partnership, notarised
Contributions and their valuation, the profit and loss split, who may sign for the firm, how a partner is admitted, and what happens when one leaves or dies. Silence here defaults you to the Civil Code.
SEC registration and certificate
Required once contributed capital reaches ₱3,000 — and worth doing regardless, since banks and clients ask for the certificate. Foreign partners bring additional clearances and ownership limits.
Barangay clearance and mayor’s permit
The same LGU sequence as any other business: zoning, fire safety, sanitary and occupancy, at the address in your articles.
BIR registration
Form 1903, Certificate of Registration, books of accounts and Authority to Print. Each partner also needs their own TIN for the share of income they report.
Employer registrations
SSS, PhilHealth and Pag-IBIG for staff, and for partners who draw a salary from the firm.
The honest trade-off
What works in your favour
- +Capital, contacts and expertise pooled from day one instead of carried by one person.
- +Cheaper and quicker to form than a corporation, with no by-laws or board machinery.
- +You write the profit split, the management rules and the exit terms yourselves.
- +General professional partnerships are not taxed at firm level — each partner is taxed on their share.
- +Limited partners can fund the business without putting their personal assets at risk.
What you are taking on
- −General partners are personally and solidarily liable — one creditor can pursue any partner for the entire debt.
- −Any general partner can bind the whole firm to a contract, whether the others agreed or not.
- −Death, withdrawal or insolvency of a partner dissolves the partnership unless the articles say otherwise.
- −Disagreements between partners are the most common reason these firms fail, and the most expensive to unwind.
- −Your interest cannot simply be sold the way corporate shares can — it usually needs everyone’s consent.
Best for
Professional practices — accountants, lawyers, architects, engineers — and small ventures where two or three people who already trust each other are putting in comparable effort and capital.
Have the hard conversations while drafting, not later
We draft the Articles of Partnership around what you actually agreed, register it with the SEC, and complete the LGU and BIR sequence.