Singapore Limited Liability Partnership
A Singapore Limited Liability Partnership (LLP) is a type of business structure where two or more partners come together to form a partnership entity that shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners.
For a Limited Liability Partnership (LLP) to exist, there must always be two or more partners. Although Singapore’s Limited Liability Partnership Act of 2005 does not restrict the benefit of LLP structure to certain classes of professionals only, in practice, LLP structure makes the most sense for chartered professions only (such as lawyers, accountants, etc.) when two or more such professionals decide to work together. For other entrepreneurs looking to set up a company, incorporating a private limited company is the preferred option.
Characteristics of an LLP
- It has a separate legal entity
- Partners have limited liability
- Minimum of 2 partners, no maximum limit
- Partners can be individuals or body corporate (company or other LLP)
|– Separate legal identity – allowed to own property, enter contracts, sue and be sued
– Partners of an LLP are not personally liable for any business debts incurred by the LLP or wrongful acts of the other partner. They can only be held liable for losses resulting from personal negligence.
– Perpetual succession
– Ease of compliance (more complex than sole proprietorship but simpler than private limited company)
|– At all times, an LLP requires a minimum of 2 partners
– A single partner can commit the partnership to formal business agreements without the consent of other partner(s).
– LLPs lack the ease of ownership transfer and investment that a company structure provides.
– No corporate tax benefits: Tax exemptions available to private limited companies are not available to LLPs. (LLP is treated as tax transparent which means an LLP is not taxed as an entity. Instead each partner is taxed on their share of the profits as per the personal income tax rates.)
What you need to set up an LLP
- Minimum 2 Partners
- Minimum one manager who must be a Singapore resident
- A Singapore registered office address
A limited liability partnership is registered with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. Foreign individuals must appoint a professional services firm to handle the registration process. Even for locals, it is recommended that they engage a professional services firm for the LLP registration process, which includes the drafting of the partnership agreement.
The LLP registration process consists of two steps: a) name reservation; and b) registration of the entity. In normal circumstances, an LLP registration can be completed in a single day.
After registration is complete, there is still way to go before you can get your business running. Click here to find out more.