Forming a Limited Liability Partnership in Singapore has its own rules and regulations. The bureaucracies put in place enable partners to operate well and achieve the company’s goals and targets.
Before entering into a partnership, potential business partners need to understand what they're getting into. They have to understand that a partnership in Singapore might be best suited for certain industries like professional services, management consultants, accountants, architects, and lawyers.
What is an LLP?
A Limited Liability Partnership (LLP) is a business structure in Singapore that enables two or more partners to work together while giving the partnership a separate legal entity from its owners. This will help to shield the partners from financial liabilities that might result from misconduct, wrongful acts, or any other negligence.
LLPs have specific features outlined by the Limited Liability Partnership Act, managed by the Accounting and Corporate Regulatory Authority (ARCA), making them distinct from other business types:
- Partners have an LLP agreement, which explains that the LLP is a separate legal entity from its partners and is responsible for its own debts.
- Partners can own property, and both individuals and corporate bodies can be partners.
- The LLP can sue or be sued in its own name and enter into business agreements independently of its partners.
- As a separate legal entity, the LLP can manage its own business structure, operations, taxes, and financial matters, separate from its partners.
- An LLP must have at least two partners, who are protected under the LLP Act, ensuring they are distinct from the LLP itself.
Limited Liability Partnership Agreement in Singapore
LLP agreement refers to the legally binding document that outlines the rights, responsibilities, and obligations of the partners in the LLP. The LLP agreement includes provisions regarding the management and operation of the LLP, profit-sharing arrangements among partners, decision-making processes, capital contributions, dispute resolution mechanisms, and procedures for admitting or withdrawing partners.
The agreement of LLP formation is important because it provides legal protection to partners by separating their assets from the liabilities of the partnership. This means that partners are not personally liable for the debts or legal obligations of the partnership, shielding their assets from potential risks associated with the business.
Additionally, it also helps to clarify the roles, responsibilities, and rights of each partner, helping to prevent disputes and misunderstandings in the future.
Documents Required for Singapore LLP
The following documents are needed if you’re planning to register LLP Singapore:
- Proposed LLP Name
- Registered Address of the LLP
- Partners' Details
- Manager's Details
- Partnership Agreement
- Consent to Act as Manager/Partner: Signed by each partner and manager.
- Declaration of Compliance
Any group of individuals or companies that want to conduct an LLP registration in Singapore needs to have the above documents ready on hand. After all the documents have been gathered, you can proceed to the next stage which is to register your LLP with the Accounting and Corporate Regulatory Authority (ACRA). To register the LLP, you can follow the steps that we have curated in the next section.
How to Set Up Limited Liability Partnership in Singapore
1. Choose LLP Name
Select a business name that is neither derogatory nor inappropriate, and ensure it does not match any existing Singaporean companies. To make everything easier, when selecting a name for your LLP, it's crucial to ensure it meets certain criteria:
- The name should not be offensive or inappropriate.
- It should not be similar to existing LLPs, businesses, companies, or protected firm names.
- Avoid names that the company registrar has advised against approving for certification.
- Choose a name that distinguishes your LLP from other corporate entities to prevent confusion.
Additionally, the LLP's name must include the words "Limited Liability Partnership" or the acronym LLP. Once chosen, submit the name for a reservation to the appropriate authority. A reserved LLP name is held for 120 days from the approval date.
2. Appoint Managers and Partners
Each LLP must have at least one manager who is a resident of Singapore with the age of at least 18 years old. Additionally, every LLP must also consist of a minimum of two partners, who can be individuals, local businesses, international businesses, or other LLPs.
3. Collect the Necessary Document
Collect all the necessary documents that we have explained in the previous section. These documents will be submitted for the LLP registration.
4. Register the LLP
Register your LLP with the Accounting and Corporate Regulatory Authority (ACRA) using their online platform BizFile+. This platform allows you to submit all the necessary information, such as the LLP's name, business address, details of partners, and manager, with ease digitally. Do keep in mind, before registering your LLP, make sure to decide on your business activities, business structure, and address.
5. Pay the Enrollment Fee
You have to pay S$115 as a registration charge for an LLP online at the BizFile+ website.
6. Get the Approval from ACRA
Once the Singapore LLP registration is complete, ACRA will send an email confirmation. You can obtain a business profile with registration details from ACRA after successfully registering your LLP. These documents are sent digitally via email and are legally sufficient for all purposes in Singapore. If needed, you can request a physical certificate from the ACRA by applying.
The registration procedure takes a short while to complete. The LLP registration in Singapore can take as little as one day.
Pros and Cons of a Limited Liability Partnership
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FAQ’s
How does the LLP’s taxation in Singapore work?
In Singapore, LLPs are not taxed at the entity level. Instead, profits are taxed as part of each partner's income. Individual partners pay personal income tax, while corporate partners pay corporate tax. There are limits on how much capital allowance and trade loss can be offset against other income, capped at each partner's contributed capital.
What are the rules for LLP in Singapore?
An LLP must have 2 to 20 partners who can be individuals of at least 18 years old or corporate bodies. The partners’ agreement must be drafted by solicitors, and the LLP must appoint at least one Singaporean resident manager.
Can a foreigner be a partner in LLP Singapore?
Yes, but the individual should be at least 18 years old.