Starting out as self-employed: what’s a limited partnership?

Got a tax question? We’ll answer for free by email.

Bitte gib eine gültige E-Mail-Adresse ein

Ask your question

Want to become self-employed? The first thing to do is to determine which legal form best suits your situation. In Belgium, many first-time freelancers opt for the status of natural person, i.e. a sole proprietorship. But it’s also possible to set up a company from the start.

The limited partnership, or SComm/CommV, is one of the company forms you can choose. But what is it, and in which situations does it make sense to set one up? In this article, we share the advantages and disadvantages of this company form as well as advice on setting up your own company.

What is a limited partnership?

A limited partnership (‘société en commandite’ (SComm) / ‘commanditaire vennootschap’ (CommV)) is a company with legal personality, meaning a company with its own rights and obligations. An Scomm/CommV always has a minimum of two partners, with at least one managing partner and one passive partner.

A few years ago, this legal form was also called a simple limited partnership (‘société en commandite simple’ (SCS) / ‘gewone commanditaire vennootschap’ (GCV)). If you’ve already heard that term, you can forget it, because it’s no longer relevant!

Managing partners and passive partners

The managing partner of an Scomm/CommV is, as the name suggests, the person who manages the day-to-day activities of the company. This person can be considered the director of the company. In addition, the managing partner is personally liable for any debts the limited partnership incurs.

The passive partner of a limited partnership invests money in the business, but does not manage it. This person is often simply a financer, who cannot be held personally liable in the event of financial problems. In other words, they can only lose the capital they have injected into the partnership.

How is an SComm/CommV different to an SNC/VOF?

The limited partnership (SComm/CommV), and the general partnership (‘société en nom collectif’ (SNC) / ‘vennootschap onder firma’ (VOF)) are two forms of partnership, which is one of the simplest and most flexible legal forms in Belgium. Unlike the SNC/VOF, the SComm/CommV has a passive partner. This partner is not personally liable for the company, whereas in the SNC/VOF, all partners are liable.

In addition, the partners of an SNC/VOF have the right to play an active role in the company. They are jointly responsible for its direction and decisions. This is different in a limited partnership: the passive partners have no say in the management of the company and therefore cannot make any decisions.

Lastly, the passive partner of an SComm/CommV can remain anonymous if they wish. Conversely, in an SNC/VOF, the names of the partners are always publicly available.

The advantages of a limited partnership

Why set up a limited partnership? Discover the advantages of a SComm/CommV.

• There is no minimum capital needed to set up a limited partnership. This company form is therefore very accessible, even for young freelancers. The managing and passive partners of an SComm/CommV can, however, decide to constitute a starting capital and make this contribution in cash or in kind.
• Since the limited partnership allows for a passive partner, it’s easier to attract investors who don’t want to be actively involved in the management of the company.
• Setting up this type of company involves fewer formalities than an SRL/BV or an SA/NV, for example. The SComm/CommV can be set up by means of a deed that does not need to be notarised. A saving of around €1,000! What’s more, establishing a limited partnership doesn’t require a financial plan, even if this is recommended for any self-employed person starting out.
• Limited partnerships have fewer obligations than other types of companies. This makes it easier to manage the company. For example, there’s no obligation to prepare annual accounts or keep double-entry accounting if your turnover doesn’t exceed €500,000. There’s also no obligation to hold an annual general meeting, unless this is stipulated in your company's articles of association.
• The shares of a limited partnership are registered and non-transferable. This is an interesting advantage if you want to create a family business and protect its character.
• As a managing partner, you’re alone at the helm of your business and therefore have full decision-making power. (Of course, if there are multiple managing partners, you run the business together.)
• As a passive partner, your personal capital is protected from the company's debts. Your liability is therefore limited to the amount you invest in the business.

💡Accountable tip: like any self-employed person, a limited partnership can deduct business expenses to reduce its taxable income and thereby pay less tax.

The disadvantages of an SComm/CommV

Like any company form, the limited partnership has some disadvantages that must be taken into account:

• Are you the managing partner of the company? In this case, you’re personally and indefinitely liable for any debts of the SComm/CommV. In other words, your personal assets may be targeted if your company is in difficulty or goes bankrupt.
• As a passive partner in a limited partnership, you have no say in the business. To be involved in the management of the company, you must become a managing partner and be personally liable for any debts.
• An SComm/CommV can’t distribute profits if the company is in deficit. Profits may be distributed to partners as soon as the losses have been fully offset.

Is setting up a limited partnership a good idea?

Do you want to become self-employed and carry out an activity that involves little risk? Do you want to get started quickly, simply, with no starting capital and manage everything yourself? Then a limited partnership is a good starting point.

When is the SComm/CommV not recommended? This company form is less suitable for companies with a higher risk of bankruptcy (page available in French/Dutch). We also advise against a limited partnership if you need a large starting capital and numerous loans to launch your freelance activity. Having an SComm/CommV would be risky here, because you’re personally and indefinitely liable for your company’s debts. In this situation, a limited liability company (‘société à responsabilité limitée’ (SRL) / ’besloten vennootschap’ (BV)) makes more sense. 

💡 Accountable tip: You've started an SComm/CommV, but you're no longer sure that this company form is best suited to your situation? You can always change the legal form of your company. The change involves costs, but these are tax deductible and frankly, it's better to pay a little and gain peace of mind, right?

Need advice on getting started as a freelancer?

It's decided, you’re going to set up a limited partnership. But where to start? Before you can begin your self-employed activity, you have to apply for a company number, draw up the deed to set up the SComm/CommV, and register your company with the Crossroads Bank for Enterprises. The creation of your limited partnership must then be published in the Belgian Official Gazette. All done? Now you can start your freelance activity!

Accountable helps you keep track of your income and expenses so you always know how much VAT and tax you and your limited partnership will have to pay. Many accountants collaborate with Accountable, so you can use the platform together.

We also offer free information and advice for all freelancers in Belgium. You’ll find lots of useful information for companies on our blog. Perfect for getting you off to the best possible start so you can make the most of your self-employed career. Good luck!

Author - Valesca Wilms

As content marketing lead at Accountable Belgium, Valesca writes about freelancing, self-employment, and taxes based on her own experience as a freelancer.

Who is Valesca ?