Things to know when it’s a partnership for business owners.

What is a partnership?

Partnership is where two or more persons agree to trade together for profit and share profits from the operation. Partners can invest with money, property or labor which if it is an investment by property or labor, the price must be appraised in the amount of money. There are 2 types of partnerships:

1. An ordinary partnership is a partnership that has only one type of partner, namely a partner with unlimited liability, all partners are jointly liable for all the liabilities of the partnership. An ordinary partnership may be registered or unregistered. If registered, it will be called Juristic Ordinary Partnership and have the status of being a juristic person under the law.

2. A limited partnership is a partnership that has 2 types of partners:

  • Limited liability partnership, there can be one person or several people. Each partner is liable for no more than the amount of their shares in the limited partnership.
  • Partner with unlimited liability, there can be one person or several people. Each partner is jointly liable for all the liabilities of the partnership.

The limited partnership must be registered and will be a juristic person under the law.

How to name for a partnership?

To name a partnership to be used in a seal, name plate, letter or other document used in the business of the partnership must have the word “Registered Ordinary Partnership” or “Limited Partnership” in conjunction with the name.

Things to know when it’s a partnership for business owners.

  • Bookkeeping

A juristic ordinary partnership or a limited partnership is responsible for accounting. The managing partner of the juristic ordinary partnership or limited partnership will be the operator instead. The duties and responsibilities of those responsible for accounting according to the Accounting Act B.E. 2543 are as follows:

  1. Daily Accounting, ledger account, commodity account and other types of accounts as necessary for accounting since the partnership registration date
  2. A fully qualified accountant must be provided by law to be responsible for the accounting of the partnership which may be employees independent contractor or an office for accounting services who graduated with at least a bachelor’s degree in accounting or equivalent as an accountant except juristic ordinary partnership or a limited partnership with a registered capital of no more than 5 million baht, total assets of no more than 30 million baht, and a total income of no more than 30 million baht, can provide those who have completed at least a diploma or a high vocational certificate (high vocational certificate) in accounting or equivalent to be an accountant. The partnership must supervise the bookkeeper to make the accounts accurate and in accordance with financial reporting standards.
  3. Documents required for accounting entries, such as records, books or any documents used as evidence for accounting entries, must be delivered to the bookkeeper completely and accurately in order for the accounts prepared to show the results of operations, financial position or changes in the actual financial position according to financial reporting standards.
  4. The first account must be closed within 12 months from the start of the account and close the account every 12 months from the previous account closing date. Unless permission to change the accounting period from the Chief Accounting Inspector or the Accounting Inspector has already been granted, the account may be closed before the 12 month anniversary.
  5. Prepare financial statements, consists of statement of financial position, statement of income, notes to financial statements and financial statements compared to the previous year and must have a certified public accountant to audit and comment, except for a juristic ordinary partnership or limited partnership with registered capital of no more than 5 million baht, total assets of no more than 30 million baht, and total income of no more than 30 million baht. A certified public accountant is not required to audit and comment on the financial statements.

However, in filing a corporate income tax return (PND.50) to the Revenue Department, juristic ordinary partnership or a limited partnership with a registered capital of no more than 5 million baht, total assets of no more than 30 million baht, and total income of no more than 30 million baht, must still submit a corporate income tax return (PND. 50) with an audit report and certify the accounts of certified public accountants or a tax auditor as well.

  1. When the certified auditor has audited and given an opinion on the financial statements, submit financial statements via electronic system (DBD e-Filing) to the Department of Business Development within five months from the account closing date.
  2. Accounts and documents required for accounting entries must be kept at the head office or a place used to produce or store products on a regular basis or a place used as a regular workplace for at least 5 years from the closing date unless permission has been obtained from the Chief Accounts Inspector or the Accounts Inspector to keep at other places, but if the accounts or supporting documents are lost or damaged, must notify the chief accounting inspector or the accounting inspector within 15 days from the date of knowledge of the loss or damage. By all means, submit the application through the work authorization system (DBD e-Permit).
  • Change of registration

When the partnership would like to change the registration no matter the name of the partnership, partners, manager partner, managing partner power limitation, location of the head office and/or branch offices, objectives, seal of the partnership, other items that should be disclosed to the public. All partners must agree to give consent together. Then the managing partner shall file an application for registration of the amendment of such changed item to the Company Partnership Registrar.

  • Dissolution and Liquidation

When the company would like to dissolve the partnership, all partners shall enter into a joint dissolution agreement to determine the desired date of dissolution of the partnership and to appoint a liquidator to settle the assets and liabilities of the partnership. Then, it is the duty of the liquidator to proceed as follows:

  1. Make an application to register the dissolution of the partnership within 14 days from the date of dissolution and must advertise in the newspaper that the partnership has dissolved with sending registered mail to all creditors.
  2. Prepare financial statements to submit to the auditor to verify and certify their accuracy. Then, call a meeting of partners to certify the liquidator as the next liquidator or appoint a new liquidator and approve the financial statements.
  3. If there is a new liquidator change or amend the liquidator’s power or modify the office address of the liquidator, must submit an application for registration of change as well.  Registration of change of liquidator or amendment of liquidator’s power must be registered within 14 days from the date of the change or the date of the resolution.
  4. Prepare a liquidation report submitted to the registrar every 3 months to show the progress of the account being settled, this report must be disclosed to partners and the creditor can check without charging a fee, but if the liquidation takes longer than one year, the liquidator must convene a meeting of the partners at the end of each year from the date of commencement of liquidation and report to the meeting how it has been handled with informing the progress of the account in detail 5. When the liquidator has completed the liquidation of the partnership, it is necessary to make a report summarizing the liquidation proceedings from the beginning. Then, call a general meeting to present a report and clarify the business to the meeting. When the meeting has approved the report, prepare a request for registration to complete the liquidation within 14 days from the date of the meeting’s approval of the report. When it is considered that the liquidation has ended, and that partnership would cease to be a juristic person.

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