Singapore Sole Proprietorship vs Limited Liability Partnership (LLP)?

Click here to view the comparison of Singapore Entities & Firms (In PDF).

Click here to view the Advantages & Disadvantages / Pros & Cons of all types of Entities & Firms in Singapore. (In PDF)

Features

Sole-Proprietorship

Limited Liability Partnership (LLP)

Introduction

• A basic & simple form of starting the business vehicle

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

Suitability of Business Vehicle

• Suitable for a small scale business with low risks

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

Definition

• A business owned by one person

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

Ownership or Owners

• Only one person

• At least 2 partners.
• No maximum limit.

Legal Identity or Status

• Not a separate legal entity
• Owner has unlimited liability
• Can sue or be sued in individual’s own name
• Can also be sued in business name
• Can own property in individual’s name
• Owner personally liable for debts and losses of business

• 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 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

Level of Fees for Registration

• Low set up costs among all business vehicles

• Low set up costs among all business vehicles

Renewal Costs

• Low costs for renewal

• Perpetual succession hence renewal is not applicable

Perception of Business by the Public

• Regarded least trust worthy and credibility

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

Funding Opportunities

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

• 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 sole-proprietorship

• 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 owner’ personal income tax rates

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

Taxation Form

• Form B

• Form P for Partnership & Form B for respective Partners

GST Implication

• Based on combined turnover of all of your sole proprietorship firms plus income derived from other trades, professional services or vocation

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

Perpetual Existence in Law

• Existence subject to life of the owner and cessation of the business

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

Transfer of Ownership

• When the owner exits the sole proprietorship will cease

• Partners can be changed

Closing the Business or Deregistration

• By Owner – Cessation of business
• 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