Choosing Between Sole Proprietorship and Limited Liability Partnership in Singapore
There was a time when the business owners used to come up with a product or a service and sell it for all their live. Today, such individuals will be doomed. It would not be possible for them to compete with the new breed of entrepreneurs. Nowadays, entrepreneurs believe in trying out new ideas and adding value to the existing deliverable. Singapore business incorporation with its advantages gives these individuals a great breakthrough.
Sole Proprietorship in Singapore
An enterprising soul having a business idea and wanting to be the master of his or her own destiny can incorporate a company in Singapore as a Sole Proprietorship. It is a perfect business structure for such individuals. A sole proprietorship is easy to register and the cost is affordable to a self-employed individual. It takes about half a day to complete the process. There are many providers of Singapore company secretary services that also offer to set up a company without any hassle for you.
Facts about Singapore Sole Proprietorship
- Any individual above the 18 years of age or a Singapore-based company can register a sole proprietorship.
- It has no separate legal identity from its owner.
- The owners are exposed to the enormous risk as they are liable for the losses and debts arising out of the business activities of the sole proprietorship. It may put their personal assets at risk.
- It is best to register this type of business firm to do business that involves considerably less risk.
- If the owner is not a resident of Singapore, it is necessary to appoint a manager who is a citizen or a permanent resident.
- The sole proprietorship needs a locally registered business address. It can be a residential address. However, the owner needs to apply and acquire written permissions from the HDB or URA officials.
- The owners who are Singapore citizens and permanent residents need to top up their MediSave account before applying for the registration of the Sole proprietorship.
- The earning of a sole proprietorship is considered that of its owner and the individual has to pay personal income tax (0% – 20%) on it.
- Raising capital for the expansion of its business activities is not easy for the sole proprietorship as it has no legal status.
- Its registration needs to be renewed each year.
Limited Liability Partnership (LLP)
Registering Singapore company setup in the form of a partnership is also an option for the like-minded entrepreneurs. Two or more individuals or corporate can come together and pool their resources to register one such business firm. They have the option of registering a General Partnership, Limited Partnership, or a Limited Liability Partnership.
However, liability associated with the running a General Partnership or Limited Partnership is enormous. This is why, those opting for a partnership choose LLP over its other forms. It can be registered in a single day.
Facts about Singapore Limited Liability Partnership (LLP)
- Two or more entities bringing complimenting skills and knowledge can come together and form an LLP.
- It is a distinctly separate legal entity from its owners. It allows an LLP to sue or be sued by others.
- The liability of the losses or debts of an LLC incurring out of an act of wrongful omission, commission or mistake of a partner or of his subordinate is his own. Other partners are not liable for the loss if they are not a part of the incidence.
- An LLP must appoint at least one manager who is ordinarily resident of Singapore.
- An LLP does not pay taxes on its income.
- The income of the individual partners from an LLP is taxable. They have to pay personal income tax on it.
- The income of a corporate partner in an LLP is taxed with corporate income tax.
- The duties and rights of partners and the LLP are governed by the limited liability partnership agreement or by the First Schedule of the Limited Liability Partnership Act 2005.
- A partner ceases being a partner upon his death or the LLP’s dissolution or as per the clause included in the agreement or by giving a 30-day notice.
- A new partner is accepted by the majority of votes.
- An LLP must include the terms “limited liability partnership” or “LLP” in its name.
- It needs to have a local registered office in Singapore.
- An LLP needs to maintain up-to-date books of accounts and failure in doing so, may lead to penalties.
- It also has to declare its solvency or insolvency each year.
Singapore Company Registration
Forming a business in Singapore is simple and fast. The entrepreneurs have to complete only two procedures to register a business or company. The ACRA (Accounting and Corporate Regulatory Authority) controls all the companies and businesses firms in Singapore. It also acts as the Company Registrar of Singapore.
During the first procedure, the entrepreneur has to log-in on the BizFile, a website, and apply and register the name of their proposed business. It takes only 1 hour to register it with the ACRA. The payment of a small fee is required to reserve the name for 60 days. During the next procedure, an application is sent to ACRA for the registration of the business.