Partnerships are one of three types of businesses allowed under Ghanaian law. They are formed when two or more people join to run a business for profit. Understanding how partnerships are formed, along with their benefits and drawbacks, helps entrepreneurs make better decisions when choosing a business type.
- Partnership Agreement
Partners may draft and sign a written partnership agreement. This agreement outlines the roles, responsibilities, profit-sharing, dispute resolution, and termination of the partnership.
- Membership
A partnership can be created between at least two (2) people and at most twenty (20) people. A corporate body may not be a partner in a partnership.
- Registration
Partnerships must register the partnership at the Office of the Registrar of Companies. Once the partnership is registered the firm is duly incorporated.
- Legal Person
A partnership is a legal entity. Once it is registered a partnership can enter into transactions or agreements in its own name as though it were a natural person.
- Tax Obligations
Partners must register with the Ghana Revenue Authority (GRA) for tax purposes. This is to enable the firm to file annual tax returns and comply with other tax laws.
- Liability and Debt Management
Partners are all jointly and individually responsible for debts incurred by the partnership . A partner who wants his liability for debts limited must be granted this limitation by the other partner .
- Regulatory Compliance
Partnerships in specific industries (e.g., mining, banking, or healthcare) may require additional licensing from other special offices.
- Termination
A partnership may end when the partners agree to do so or by the order of a court. It may also end when the partnership acquires more debt than assets (insolvency) or when a partner dies.
Partnerships in Ghana offer a flexible and collaborative way for entrepreneurs to do business, with clear rules around formation, registration, and management. By drafting a partnership agreement and understanding the roles, responsibilities, and tax obligations, partners can avoid misunderstandings and protect their interests.
However, it’s important to be aware of the potential risks, such as joint liability for debts and the need for regulatory compliance in certain industries. With proper planning and a strong partnership agreement, businesses can thrive, while ensuring they are prepared for any challenges that may arise, including termination or insolvency.
Philipa N. A. Sima Nuamah on behalf of OSD and Partners. [email protected]
