3G Accounting

Partnership/LLP

Register of a Partnership/ Limited Liability Partnership (LLP)

Partnership

A partnership is a business firm formed by two to twenty partners. Once there are more than twenty partners, the partnership must be registered as a company under the Companies Act, Cap. 50.

The features of Partnership are as follows:

Not a separate legal entity

Partners have unlimited liability

Can sue or be sued in firm’s name

Cannot own property in firm’s name

Partners personally liable for partnership’s debts and losses incurred by other partners

Must renew before the expiry date

Profits taxed at partners’ personal income tax rates

Limited Liability Partnership

A Limited Liability Partnership (LLP) is a vehicle for doing business in Singapore. An LLP gives owners the flexibility of operating as a partnership while having a separate legal identity like a private limited company.

This means that the LLP is seen as a body corporate and has a legal personality separate from its partners. The LLP has perpetual succession, which means any change in the partners of an LLP will not affect its existence, rights or liabilities.

The partners of the LLP will not be held personally liable for any business debts incurred by the LLP. A partner may, however, be held personally liable for claims from losses resulting from his own wrongful act or omission, but will not be held personally liable for such wrongful acts or omissions of any other partner of the LLP.

An LLP is required to keep accounting records, profit and loss accounts and balance sheets that will sufficiently explain the transactions and financial position of the LLP. In the event the LLP does not do this, the LLP and every partner shall be prosecuted and the penalty may be a fine or imprisonment, or both. In addition, the LLP shall submit to the Registrar an annual declaration of solvency or insolvency (i.e. being able or unable to pay its debts respectively) which will be made available to the public.

The features of Limited Liability Partnership are as follows:

At least two partners, no maximum limit

Partners can be individuals or body corporate (company or other LLP)

A separate legal entity from its partners

Partners have limited liability

Can sue or be sued in its own name

Can own property in its own name

Partners personally liable for debts and losses resulting from their own wrongful actions

Partners not personally liable for debts and losses of LLP incurred by other partners

A separate legal entity from its partners have limited liability

Can sue or be sued in its own name

Can own property in its own namePartners personally liable for debts and losses resulting from their own wrongful actions

Partners not personally liable for debts and losses of LLP incurred by other partners

Quick and easy to set up

Fewer formalities and procedures to comply with as compared to a company

Registration cost is low and fewer regulatory duties to adhere to than a company

No statutory requirement for general meetings, share allotments, etc.

Only an annual declaration of solvency must be lodged by the manager stating whether the LLP is able or not able to pay its debts during the normal course of business

One time registration

Profits taxed at partners’ personal income tax rates (if individual)/ corporate tax rate (if corporation)