In this comprehensive guide, we cover the fundamentals of registering and forming your Limited Liability Partnership (LLP). Learn about the documents and preparation you would need to do prior to incorporation, how to register, immediate steps to take post incorporation, and finally, your new partnership Annual Compliance obligations.
What is a Partnership?
A partnership is a business owned by 2 to 20 partners. It is business that bears a legal relationship between the partners who carry on the business with the objective of making profit and sharing it between them.
The partners will be the owners of the business, and they are tasked with the management and operations of the business entirely.
Types of Partnership
In Singapore, there are 2 main types of partnership.
- General Partnership (GP): Where the liability of the partners are unlimited. In the event of liquidation due to insolvency, the registered partners are liable for the debts or losses incurred by the other partners and the business.
- Limited Liability Partnership (LLP): The more commonly registered Partnership, as it is recognized as a separate legal entity. This implies that the LLP can own property, can be sued, or sue. Unlike GP, whenever there are liabilities arising from the action of any partner, other innocent partners and their personal assets would not be taken into consideration from such liabilities. Rather, the liabilities would only be limited to the capital that was contributed to the LLP.
Why Form a Partnership?
A partnership is usually suited for business involved in professional services such as Accountancy, Law, and Architecture.
The Limited Liability Partnership is a mix between Sole Proprietorship and a Private Limited Company. This is because, similar to Sole Proprietorship, it is relatively easy and low cost to register, and terminate, as well as commerce operations.
On the other hand, similar to Private Limited Companies, a LLP is also recognized as a separate legal entity and has limited liability protection.
LLP are also exempted from auditing of accounts, and they are taxed on a personal level, according to the partners’ individual income tax.
How to Register & Form a Partnership
Any individual, whom is 18 years old and above, a Singapore Citizen or Permanent Resident (PR) or EntrePass Holder can register and form a partnership. Registering and forming a partnership is similar to that of registering a Sole Proprietorship.
Prior to the registration and formation, you would need to have the following information and documentation.
- Name of Partnership, where the LLP must include the “Limited Liability Partnership” or “LLP” suffix.
- Registered business address of Partnership
- Partners and managers particulars such as Singapore Identitiy Card, or Foreign Passport
- Declaration of compliance
- Residential address of the Partners and Managers
- Consent to Act as Manager and Statement of Non Disqualification to Act as Manager
Depending on the nature of business and circumstances, Leftright Corporate may also need the owners to fill up a KYC form, as well as identity details.
With the above documentations and respective approval from governing bodies, the registration fee is $115 for one year, or $175 for 3 years. These fees are already included in Leftright Corporate’s Partnership Formation Package.
Email Confirmation: Upon successful registration, ACRA will send an email notification confirming the successful Limited Liability Partnership registration & formation. Leftright Corporate will retrieve and provide the business profile containing the registration details.
Bank Account Opening: Your new LLP can open a bank account in its own name at various banks, and open multiple accounts with different currency denomination if required.
Annual Compliance: The new LLP must keep an up-to-date books of accounts so as to substantiate all the transactions and financial position of the LLP.
There must be an annual declaration of solvency or insolvency by the manager of the LLP. This declaration must be submitted to the Registrar within the first 15 months from the date of the registration of the LLP. Thereafter a declaration once in every calendar year must be submitted at intervals of not more than 15 months.
Should the Partnership be a live entity, that is continuing its business, the Partnership registration must be renewed with ACRA annually.
Finally, any changes to registered particulars such as a change of name or a change of partner or manager must be notified to ACRA.