The SNC:characteristics, advantages and disadvantages

The Société en Nom Collectif, or SNC, is a partnership. The legal status is designed for professionals who carry out an activity in common. Most often this type of company is held by a family. What are the characteristics of SNC? What are the pros and cons of this legal form? Here is all the information you need.

All about the SNC

Definition:what is a General Partnership?

A Société en Nom Collectif or SNC is a partnership whose partners are responsible together. This legal form is popular in the context of family matters. The partners of an SNC are jointly and severally liable for the debts of the company. It should be noted that in the context of an SNC, it is difficult to transfer the shares to a third party. This type of business can evolve into a partnership limited by shares. The SNC is an unlimited risk company. It therefore differs from the SARL, the EURL, the SAS or the SASU which are legal forms whose liability is limited to the amount of the contributions.

The creation of an SNC

Creating an SNC is in the vast majority of cases the will of a family or several partners who wish to pool their knowledge and skills. These associates work together and share the profits. SNCs are companies whose ambition is to keep the same partners over the long term. To create an SNC, the steps are the same as for the SARL. The general partnership must in particular be registered with the Trade and Companies Register (RCS). No share capital is taxed. It is possible to take advantage of contributions in kind, in cash or in industry. The creation of an SNC costs around 250€. SNCs must publish an announcement in the Official Civil and Commercial Announcements Bulletin (BODACC) when they are created.

Partners of an SNC

The partners of an SNC can be natural persons or legal persons. In all cases, they must be adults. Because they are all considered traders, this status excludes civil companies.

An SNC may have one or more managers from the SNC. They have the status of non-salaried workers. They are therefore affiliated to the Self-Employed Social Regime. If the manager is not a partner, he is an employee and is therefore affiliated to the General Social Security Regime.

The tax regime of the SNC

A general partnership is subject to income tax by default. Partners can choose to be subject to corporation tax. Attention ! This decision is irrevocable.

• If the SNC is subject to income tax, then each partner declares his share of the profit recovered the category to be filled in is that of Industrial and Commercial Profits (BIC) or Non-Commercial Profits (BNC) depending on the activity of the company.
• If the SNC opts for IS, the taxation is similar to the SARL, namely 15% up to €38,120 in profits and then 33.33% beyond.

The advantages of a general partnership

The SNC is a legal form that has many advantages.

• It is simple to create and does not require too much funding. It is for this reason that it is often preferred to the partnership limited by shares. Note that the liability of the partners is the same, it is indefinite and joint and several.
• An SNC can open its capital to outside investors. This opportunity allows collaboration with other legal forms.
• The general partnership can benefit from tax credits, and more particularly those intended for natural persons. Remember that the income of an SNC is considered as personal income.

The disadvantages of a general partnership

The main disadvantage of the SNC is the indefinite and joint liability of the debts. A creditor can sue a partner for all of the social debts of the SNC even if the person concerned is not directly liable. Personal assets may therefore be affected.

SNC shares are very difficult to sell. This transfer is not free, it requires the agreement of all the partners. A majority is not enough!