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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 Factors LLC (Pte. Ltd) LLP Sole Proprietorship
Legal Status Separate legal identity Separate legal identity Not a separate legal identity
Debt & Liabilities Ownership Limited Liability. Every shareholder’s extent of liability is limited to his investment in the company Limited Liability. Every partner’s liability is limited uptil the extent of his investment in the LLP Unlimited Liability. The owner has to bear the responsibility and is personally accountable for debts and losses
Succession Abilities Not limited to the death or retirement of the members, has an enduring structure Not limited to the death or retirement of the members, has an enduring structure Lack of enduring structure and perpetual succession
Ease of Raising Capital Easy to raise capital, since banks and financial institutes view credibility in an LLC Difficult to raise capital. Have to remain limited to private finances and partners’ contributions Difficult to raise capital. Have to remain limited to private finances and partners’ contributions
Registration Timeline 1-2 days 1-2 days 1-2 days
Taxation Regime Profits 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 300,000 Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime Profits are distributed amongst the partners, and they are taxed at the personal income tax rate, which is a tier-based regime
Transference of Ownership Easy to transfer partial or full ownership of the company, by simple transfer of shares Difficult 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 Difficult 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 Requirements More complex structure, hence the need of major setup/compliance costs and paperwork Moderate setup, hence the compliance costs and paperwork are comparatively lesser than an LLC Minimum setup, hence the compliance costs and paperwork are a bare minimum
Point of View of the Public Holds highest credibility and has a strong public perception Holds moderate public image, and comparatively lesser credibility Holds low public perception, and hence has a low image
Dissolution Procedure Needs a strike off process, which is intricate, involves a lot of complexities, and legal compliances Needs a strike off process, which is comparatively less intricate and involves a less number of compliances, than an LLC Least 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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