One can register a Singapore Business either as a sole proprietorship or a Limited Liability Partnership (LLP). LLP is the most preferred approach as it reduces liability risk from the owners. In addition, it is a business structure in which two or more partners incorporate a partnership. Above all, the major characteristic of an LLP is that the incorporation shields co-partners from liabilities. For instance, these liabilities arise from willful misconduct or gross negligence by one of the partners.
The Singapore government gave the green light for LLP registrations in 2005. However, this was after considering the inevitable changes in international developments extensively in consultation with concerned parties.
The existence of an LLP depends on the presence of two more partners. The Singapore LLP Act 2005 does not put restrictions on its structure. The structure benefits specified classes of professionals only. However, practicing an LLP makes more sense where charter professionals only are involved. Above all, they must decide to work as a team. For any other entities seeking to start a company, the best approach would be incorporating a private limited company.
What you need to know about Singapore LLP
An LLP in Singapore is considered a separate legal entity. That means it can own property, sue, or be sue in a legal setup. None of the partners can be held personally liable for the misconduct of another partner.
Suppose with a business’s operation under the Singapore Limited Liability Partnership. For instance, one partner becomes liable for their wrongful act of commission or omission. Therefore, the LLP is liable to a similar extent. Claims can be laid against the LLP according to its assets.
Partners are held personally liable for liabilities that come due to their acts of commission or omission or negligence. Other innocent partners remain insulated from the liabilities. Their liabilities will be limit only to their contribution to the LLP.
A limited liability agreement exists to govern a Singapore LLP. In addition, it also governs its partners’ mutual rights and duties. There may be events that the agreement that does not exist for any reason. After that, the First Schedule of the Limited Liability Partnership Act 2005 takes effect.
Singapore LLPs are not taxed at entity status, and profits are considered part of each partner’s personal earning. They are hence, tax at personal income tax rates. If a partner is an individual, their income share falls under taxation base on their personal income taxing rate. For companies, their share of income from the LLP is subject to a taxation-based tax rate.
Members and management
An LLP includes not less than two partners. But there is no limitation on the maximum number of partners. A partner can either be a person or a company.
A partner can cease to part of an LLP due to death, dissolution, or as stated in the partnership agreement. If there is no such agreement, the exiting partner must give a 30-day notice. Consent from existing partners is required for approving propose new partners. Any other matter is concluded through voting, where the majority vote carries the day.
An LLP does not have directors, shareholders, or a secretary. In other words, it is the partners who own and run the business.
Also, the appointment of at least one manager who is a person and more than 18 years of age and Singapore resident is mandatory.
Title and Address of Limited Liability Partnership
- The phrase “limited liability partnership” or its acronym “LLP” must be part of LLP’s name.
- Each LLP must have a registered office in Singapore. All communications and notices shall be addressed to this office.
An LLP must keep its books update to substantiate all transactions and financial standing. If not, the LLP faces prosecution and penalties. However, does not have to file its accounts or face auditing. In addition, it does not have to disclose its capital either.
The manager is responsible for submitting to the Registrar a yearly declaration of solvency or insolvency. For instance, it must come within the first 15-months from the registration date. And then another shall be submitted once every calendar year, 15-months and not more, apart.
All invoices and correspondences must bear a statement showing it’s registered under LLP. It must include a clear display name of the Limited Liability Partnership. And, in case of any changes to the LLP’s particulars, the information must be lodged with the registrar within 14 days.
Required documents for Limited Liability Partnership in Singapore
- Propose name
- Details of the partners/managers as per their identification documents
- Partners’ residential address
- Declaration of compliance.
- Consent to serve as Manager and Statement of Non-Disqualification to Act as Manager
- If a partner is a company: registration details.
How to register a Singapore LLP: Procedure
Now that you know what a limited liability entails, registration should be easy. The Accounting and Corporate Regulatory Authority (ACRA) of Singapore are the body responsible for these registrations. In case it’s a foreign body, they must appoint a professional service firm to handle the process. This is also recommended even for locals.
In conclusion, there are two steps involved. 1) Reserving a name and; 2) Registering the entity. One can complete this process in one day.
Opening a bank account for Singapore Limited Liability Partnership
You can open a bank account at any time after registering the LLP. There are several international, foreign, and local banks in Singapore for this. And the LLP can open several accounts of different currencies or just one that accepts multiple currencies.
You will need:
- Account application forms
- Partners’ Resolution
- Certify copies of NRIC/Passport for all partners and authorize signatories
- Partnership agreement
- Latest profile in print
Requirements for annual LLP filing
- An up-to-date book of accounts must be kept to account for every transaction and financial position of the Limited Liability Partnership.
- In addition, maintenance of accounting and other records is mandatory for 7 consecutive years.
- Similarly, the manager should submit an annual declaration of solvency and insolvency, starting from the first 15-months and subsequent one every year within the same period.
Pros of a Singapore Limited Liability Partnership?
- An LLP is registered as a separate legal identity and can own property, sue, or be sue.
- No holding any partner liable for any debts of the LLP arising from the misconduct of another member due to limited liability.
- Any changes in LLP concerning one partner do not affect the existence, rights, or liabilities.
- Easy to compliance
Cons of a Singapore Limited Liability Partnership
- At least two partners at any given time are required.
- One partner can commit the Limited Liability Partnership to a formal business agreement without consulting the other partner,
- It is hard to transfer ownership and investment base on a company structure.
- Lack of corporate tax benefits