How To Start A Partnership Business In South Africa

How To Start A Partnership Business In South Africa

What is a Partnership ?

A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations.

How To Start A Partnership Business In South Africa

1. Write a formal partnership agreement

It’s not a legal requirement for partnership agreements to be in writing. However, a formal written agreement is important.

It should clarify each partner’s role and responsibilities, and specify the way forward in case of conflict or a partner deciding to leave.

2. Know your partner for a reasonable amount of time

Ideally, you should have a prior work relationship with someone before deciding to become business partners.

You need to know that this person is capable of doing the required job and that your personalities are compatible.

3. Start on the same page

To start a partnership on the right foot and avoid confusion and conflict later, open and honest discussions are essential. All partners should share the same core values and be aware of one another’s fears and goals for the business.

Frequently Asked Questions (FAQs).

How much does it cost to register a partnership in South Africa?

It costs R50 for a name reservation application. Companies can register for an initial registration fee between R125 and R475 (for a private company it’s 150, for non-profits it’s 475).

How does a partnership work in South Africa?

A partnership is also not a separate legal person or taxpayer. Each partner is taxed on his or her share of the partnership profits. Each person may contribute money, property, labour or skills, and each expects to share in the profits and losses of the partnership.

How much does it cost to start a partnership in South Africa?

The cost of registration can be up to R200, depending on the state or territory. Other than this, a partnership can be remarkably inexpensive to set up. A partnership is not a separate legal entity, so while the partnership requires its own ABN and must lodge its own tax return, the partnership itself is not taxed.

Does partnership need to be registered in South Africa?

A partnership (or a corporation) is obliged to secure a certificate of registration with the SEC to own a license to operate their business.

Who Cannot be a partner in a partnership in South Africa?

Insolvency means a person who is not able to pay it’s debts . So he cannot be a partner of a partnership firm. No member can be partner without the agreement between a co-owners.

Does a partnership pay tax in South africa?

Income from a partnership

The partnership doesn’t pay tax on its income, however you must lodge a partnership tax return to declare: the income the partnership earns. deductible expenses. the distribution of the net income or loss between the partners.

Do partnerships pay tax on profit in South Africa?


Each partner will be taxed in his/her share of the Partnership profits, so this means that each partner is taxed individually and not the Partnership itself. Each partner is also liable for his/her own share of normal income tax.

Who can enter into partnership in South Africa?

A partnership agreement can be entered into between persons who are competent to contract. Every person who is of the age of majority according to the law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject can enter into a partnership.

What is the disadvantage of partnership in South Africa?

Disadvantages of a partnership include that: the liability of the partners for the debts of the business is unlimited. each partner is ‘jointly and severally’ liable for the partnership’s debts; that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts.

Is a partnership easy to start in South Africa?

A partnership, as opposed to a corporation, is fairly simple to establish and run. No forms need to be filed or formal agreements drafted (although it is advisable to write a partnership agreement in the event of future disagreements).

Is a partnership a legal entity in South Africa?

A partnership is not a corporate entity” It does not have a separate legal persona and this has several important legal consequences: in the relationship between the parties all rights and duties onfy exist between the partners Inter se, the rights and duties of the partnership are the rights and duties of the partners.