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LLC (Private Limited Company) vs LLP vs Sole Proprietorship

The information given below provides an exhaustive systematic explanation of the differences between a Limited Liability Company (LLC) also known as Private Limited Company, Limited Liability Partnership (LLP), and Sole Proprietorship. This information will prove beneficial for you in choosing the most viable business structure for your business needs.

To start with, it can be said that the environment of Singapore is very business friendly. This type of atmosphere encourages entrepreneurs to set up companies here. You can certainly choose from the three options given below. Every type of business structure has certain differences in their operations. The table given below is nothing but an extension of the previous articles on each type of business entities.

Comparison: Singapore LLC vs LLP vs Sole Proprietorship

Comparing FactorsLLC (Pte. Ltd)LLPSole Proprietorship
Legal StatusSeparate legal identitySeparate legal identityNot a separate legal identity
Debt & Liabilities OwnershipLimited Liability. Every shareholder’s extent of liability is limited to his investment in the companyLimited Liability. Every partner’s liability is limited uptil the extent of his investment in the LLPUnlimited Liability. The owner has to bear the responsibility and is personally accountable for debts and losses
Succession AbilitiesNot limited to the death or retirement of the members, has an enduring structureNot limited to the death or retirement of the members, has an enduring structureLack of enduring structure and perpetual succession
Ease of Raising CapitalEasy to raise capital, since banks and financial institutes view credibility in an LLCDifficult to raise capital. Have to remain limited to private finances and partners’ contributionsDifficult to raise capital. Have to remain limited to private finances and partners’ contributions
Registration Timeline1-2 days1-2 days1-2 days
Taxation RegimeProfits are taxed at corporate tax rate, i.e. below 9% for profits up to SGD 300,000 and capped at 17% for profits above SGD 300,000Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regimeProfits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime
Transference of OwnershipEasy to transfer partial or full ownership of the company, by simple transfer of sharesDifficult to transfer the ownership of business. Cannot be sold as a whole, i.e. have to individually sell each of the assets, licenses and permitsDifficult to transfer the ownership of business. Cannot be sold as a whole, i.e. have to individually sell each of the assets, licenses and permits
Maintenance RequirementsMore complex structure, hence the need of major setup/compliance costs and paperworkModerate setup, hence the compliance costs and paperwork are comparatively lesser than an LLCMinimum setup, hence the compliance costs and paperwork are a bare minimum
Point of View of the PublicHolds highest credibility and has a strong public perceptionHolds moderate public image, and comparatively lesser credibilityHolds low public perception, and hence has a low image
Dissolution ProcedureNeeds a strike off process, which is intricate, involves a lot of complexities, and legal compliancesNeeds a strike off process, which is comparatively less intricate and involves a less number of compliances, than an LLCLeast complex, basically involves issuing of a notice of termination, followed by a notice of cessation to registration authorities

The information given above illustrates the specific parameters of the three types of Singapore companies that can be incorporated by a Singapore local resident person. In case you plan to incorporate a Singapore Company, SBS Consulting will go the extra mile in assisting you in the process, and suggest the most appropriate way of setting up a business entity in Singapore.

If you want to incorporate an LLC, LLP, or a sole-proprietorship in Singapore, just give us a call on +65 6536 0036 or mail us at info@sbsgroup.com.sg

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