Comparison of all types of Partnership Firms in Singapore?

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Features

Partnership (General)

Limited Partnership (LP)

Limited Liability Partnership (LLP)

Introduction

• A basic form of business vehicle with two or more co-partners

• Often used as investment vehicle for large projects requiring substantial source of cash

• Hybrid form of business vehicle consisting both company and typical partnership

Suitability of Business Vehicle

• Suitable for a small to medium size of business journey with co-partners

• Flexibility for allowing a diversification of a portfolio

• Suitable to carry professional services such as Law Firm, Audit Firm, etc

Definition

• An association of two or more persons carrying on business in common with a view to profit

• A partnership consisting of two or more persons, with at least one general partner and one limited partner

• A partnership where the individual partner’s own liability is generally limited

Ownership or Owners

• Between 2 and 20 partners.
• A partnership of more than 20 partners must incorporate as a company under the Companies Act, Chapter 50 (except for professional partnerships) 

• At least 2 partners; one general partner and one limited partner.
• No maximum limit.

• At least 2 partners.
• No maximum limit.

Legal Identity or Status

• 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

• Not a separate legal entity
• General partner has unlimited liability
• Limited partner has limited liability
• Can probably sue or be sued in firm’s name
• Cannot own property in firm’s name
• General partner personally liable for debts and losses of the LP
• Limited partner not personally liable for the debts or obligations of LP beyond amount of his agreed contribution

• A separate legal entity from its partners
• Partners have limited liability
• Can sue or be sued in LLP’s name
• Can own property in LLP’s 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

Requirements For Registration or Formation or Incorporation

• Age 18 years or above. Singapore citizen / Singapore Permanent Resident / EntrePass holder.
• If owner not resident in Singapore, he must appoint an authorized representative who is ordinarily resident in Singapore.
• Self-employed persons must top up their Medisave account with the CPF Board before they register a new business name, become a registrant of an existing business name, or renew their business name registration.
• Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.

• At least one general partner and limited partner. Both can be individuals (at least 18 years old) or body corporate (company or LLP).
• If all general partners are ordinarily resident outside Singapore, they must appoint a local manager who is ordinarily resident in Singapore.
• Self-employed persons must top up their Medisave account with the CPF Board before they register as a partner of a new LP, become a registered partner of an existing LP, or renew their LP registration.
• Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.

• At least two partners, who can be individuals (at least 18 years old) or body corporate (company or LLP).
• At least one manager ordinarily resident in Singapore and at least 18 years old.
• Undischarged bankrupts cannot manage the business without approval from the Court or the Official Assignee.

Easiness of Registration

• An easy process to be completed within a few hours however subject to referral to different authorities which may delay up to 14 working days

• An easy process to be completed within a few hours however subject to referral to different authorities which may delay up to 14 working days

• An easy process to be completed within a few hours however subject to referral to different authorities which may delay up to 14 working days

Level of Fees for Registration

• Low set up costs among all business vehicles

• Low set up costs among all business vehicles

• Low set up costs among all business vehicles

Renewal Costs

• Low costs for renewal

• Low costs for renewal

• Perpetual succession hence renewal is not applicable

Perception of Business by the Public

• Regarded least trust worthy and credibility

• Regarded moderate trust worthy and credibility

• It is common with specific professions hence it is easily and strongly regarded more trust worthy and credibility

Funding Opportunities

• Capital injection is limited to the new partner.
• Obtaining loans from banks is only by mortgaging the personal assets of the partners.

• Obtaining loans from banks is only by mortgaging the personal assets of the partners.

• Obtaining loans from banks is only by mortgaging the personal assets of the partners.

Yearly Statutory Obligations

• Yearly renewals (one year or three years)
• CPF Medisave Top-Up required for Self-employed Persons before they can renew partnership

• Yearly renewals (one year or three years)
• CPF Medisave Top-Up required before they can renew LP

• Annual declaration of solvency/insolvency must be lodged by one of the managers stating whether the LLP is able or not able to pay its debts during the normal course of business.
• No statutory requirement for general meetings, directors, company secretary, share allotments etc.

Taxation

• Profits taxed at partners’ personal income tax rates

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

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

Taxation Form

• Form P for Partnership & Form B for respective Partners

• Form P for Partnership & Form B for respective Partners

• Form P for Partnership & Form B for respective Partners

GST Implication

• Based on combined turnover of all partnership businesses with the same composition (structure) of partners

• Based on combined turnover of all partnership businesses with the same composition (structure) of partners

• Based on combined turnover of all partnership businesses with the same composition (structure) of partners

Perpetual Existence in Law

• Existence subject to partnership agreement

• Existence subject to partnership agreement
• If there is no limited partner, the LP registration will be suspended and general partners are deemed registered under the Business Registration Act.
• Once a new limited partner is appointed, the registration of the LP will be restored to “live” and general partners’ registration under the Business Registration Act ceases.

• The LLP has perpetual succession until wound up or struck off.

Transfer of Ownership

• Partners can be changed

• Partners or corporate bodies can be changed

• Partners can be changed

Closing the Business or Deregistration

• By the partners – Cessation of business
• Registrar can cancel registration if not renewed or where Registrar is satisfied business is defunct

• By general partner – Cessation of business or dissolution of LP
• Registrar can cancel registration if not renewed or where Registrar is satisfied business is defunct

• Winding Up – Voluntarily by members or creditors, compulsorily by the High Court
• Striking off