In Singapore, entrepreneurs can choose from a variety of business structures. Limited Liability Partnerships (LLP) are recognized as favorable options for conducting business in Singapore. Professional service providers including lawyers, architects, accountants, and management consultants typically favour business structure like Singapore LLP.
In this extensive article, you will find the essentials of creating and registering your limited liability partnership in detail. Learn about the paperwork and planning required before incorporation, how to register, and the fundamental steps to take for incorporation.
LLP in Singapore: Key Details
Given that an LLP perfectly combines the advantages of both a partnership and a private limited company, it also has less stringent compliance requirements than a private limited company. Let’s quickly go through an LLP’s characteristics.
Liability
- LLP is a separate legal entity that is both capable of suing and being sued.
- LLP has the authority to purchase and hold assets in its name apart from its Partner.
- In Singapore, LLPs have perpetual succession, meaning that changes in the partners do not affect the LLP’s continued existence, rights, or obligations.
Taxation
- An LLP won’t be considered a separate legal entity for tax purposes, and as a result, it won’t be subject to entity-level taxation. Instead, each partner will pay taxes on their individual portions of the LLP’s income.
- If a partner is an individual, his LLP revenue will be taxed according to his personal income tax rate; if a partner is a firm, its LLP income will be taxed according to the corporate tax rate.
Members and Management
- Anyone can be admitted as a partner in an LLP, including an individual, a local corporation, a foreign firm, or another LLP.
- The maximum number of partners is unlimited, with a minimum need of two partners.
- The manager for an LLP must be a natural person of full age (i.e., at least 18 years old) and capacity, as well as an ordinary resident of Singapore. Unless the manager convinces the court that he should not be held accountable, he is personally responsible for all fines imposed on the limited liability partnership for any violations of the LLP Act.
- While foreigners are also permitted to join as partners and remain in their home countries, the manager must be a resident of Singapore.
- Generally speaking, LLP debts are not the responsibility of the partners. Although a partner’s personal culpability for his own wrongdoing or omission is unaffected, he is not personally responsible for the wrongdoing or omission of any other partners in the limited liability partnership.
- If a partner violates the law while acting on behalf of the limited liability partnership or under its authority and is held accountable to a third party (other than another partner), the limited liability partnership is as responsible as the partner.
Name and Address
- A Singapore LLP must have a “limited liability partnership” or the abbreviation “LLP” in its name. Each limited liability partnership is required to have a registered office in Singapore where all correspondence and notices may be sent.
Compliance
Annual Compliance
- Every LLP must file a declaration stating that, in that manager’s view, the LLP can pay its debt or any other declaration that may be required by law with the Registrar.
- The declaration must be submitted within 15 months after the day the LLP was registered and then once per year at intervals no greater than 15 months.
- Penalties are applicable for failing to submit this annual declaration.
Accounts
- LLP must keep accurate books and records that reflect the company’s financial situation fairly for at least a period of 5 years for each financial year .
- The registrar has the right to demand the records at any moment.
- The Limited Liability Partnership Act also lists penalties for failing to maintain records.
DOCUMENTS REQUIRED FOR LLP REGISTRATION IN SINGAPORE
- Name of the potential LLP
- Information on the LLP managers and partners (foreign passport or Singapore ID card)
- The residence of the Partners/Managers is in Singapore
- Statement of compliance
- Address for the LLP’s registered office
- Declaration of Non-Disqualification and Consent to Act as Manager
- Registration information for the business serving as LLP’s partner (registration number, jurisdiction, registered address, etc)
LLP Registration Procedure
An LLP can be set up in one of two ways:
- ACRA’s electronic filing and information retrieval system, BizFile+ is used for online registration.
- Hiring a licensed filing agent to execute the online application on your behalf
The Company Registrar (Accounting and Corporate Regulatory Authority) recommends employing a corporate service provider that offers Singapore incorporation services. LLP can be registered quickly. A typical Limited Liability Partnership Singapore can be registered in a single day.
Corporate Documents Issued
An email confirmation of the Singapore LLP registration will be sent by ACRA. After the LLP has been successfully registered, a company profile from ACRA can be received that contains the registration information. These two documents are delivered in a digital format by email, which is acceptable in Singapore for all purposes.
3 EASY STEPS FOR REGISTERING LLP IN SINGAPORE
1. Reserve and Register Your LLP
The first stage is finding a name for the proposed LLP and getting it approved. Once the registration price ($15) has been paid, the name approval process should take no longer than 15 minutes.
2. Entity Registration
To register your LLP, visit BizFile+. There is a S$100 registration fee.
3. Issuance of Business Profile and UEN
A link to the free Business Profile will be sent via email to the applicant who performed the registration, containing information about the entity’s business registration. A Unique Entity Number (UEN), a number of identification, will also be provided. When dealing with governmental organizations, all corporate firms must utilize UEN.
LLP has the ability to open many accounts with varied currency denominations in its own name at different banks as needed once its obtains the confirmation from ACRA.
PROS AND CONS OF SINGAPORE LLP
PROS OF SINGAPORE LLP
Perpetual Succession:
Similar to a Private Limited, an Limited Liability Partnership in Singapore will remain in existence forever unless it is wound up or goes bankrupt. It is simpler to transfer the company on to new owners because it has a permanent existence. For instance, a family-owned LLP can transfer ownership of the company to the following generation.
Limitation of Liability For Errors Made By Other Partners
In an LLP, partners are not liable for debts committed by other partners. Let’s imagine, for example, that you are a partner in an accountancy LLP. Two of your partners make critical errors in an auditing project while working on a significant client account. For losses sustained as a result of these errors, the client sues the LLP. The liabilities accumulated by your two other partners are not your responsibility.
Simple Compliance Requirement
Compared to a Private Limited entity, an LLP has lesser compliance requirements. LLPs do not need to have their finances audited, hold AGMs, file annual returns with ACRA, appoint company secretaries, or do any of the other things that Private Limiteds must do. This helps LLP partners manage their business more efficiently and affordably. Of course, these cost and effort reductions for compliance are not very significant given how straightforward the requirements are for operating a Private Limited.
CONS OF SINGAPORE LLP
No Tax Benefits
In an LLC, partners are subject to personal income tax rates. LLPs are not exempt from corporate tax rates in Singapore.
Minimum Requirement of 2 Partners
A minimum of 2 partners must always be present in the LLP. If you only have two partners and your lone partner threatens to leave after a severe conflict, you may experience existential crisis unless you can find a new one.
Consensus and Consent
Without the approval of the other LLP partners, an individual partner in an LLP may enter into contracts or other business agreements with other parties. If the LLP partners’ interests are not properly matched and one of them potentially goes rogue, this might be quite risky.
Limitation of Liability
Only liabilities incurred by other LLP partners are covered by the liability limitation. This limitation of liability does not apply to any liabilities that you may have incurred due to errors, omissions, negligence, or other causes.
Transfer of Ownership
Because all firm assets, intellectual property, licences, permits, etc. must be transferred on an individual basis, ownership transfers in an LLP are more challenging. It is not possible to sell the entire LLP along with all of its assets in one fell swoop.
CONCLUSION
To sum up, running a firm using an LLP is relatively easy. Despite this, it is still crucial for you and your partner(s) to thoroughly weigh the benefits and drawbacks of an LLP before deciding to register.
Want to register an LLP in Singapore? Look no further! Relin Consultants has the expertise and experience to guide you through the process. Contact us today for assistance. Please contact us at any time.
