Setting Up a Limited Liability Partnership in Singapore

Limited Liability Partnerships (LLPs) are one of the most popular business entities in Singapore. This business structure was first introduced by the government in 2005. Although the Limited Liability Partnership Act of 2005 does not restrict LLP to certain professional classes, in practice, LLPs are best suited for chartered professions, such as lawyers, accountants, tax advisors, etc. Whereas for other entrepreneurs in Singapore, setting up a Private Limited Company is the preferred option.

If you think a Limited Liability Partnership is a perfect fit for your business type, keep reading to see a clearer picture of what is required for setting up an LLP in Singapore (and the advantages you can get from establishing one).

What is a Limited Liability Partnership?

A Limited Liability Partnership (LLP) in Singapore is a partnership entity that is registered under the Limited Liability Partnerships Act. An LLP has the following characteristics:

Ownership

An LLP is owned and operated by at least two partners, which can be individuals or a body corporate. There is no limit on the number of partners in an LLP.

The relationship between partners of an LLP, as well as their responsibilities and rights, are regulated by:

• The limited liability partnership agreement; or
• The First Schedule of the Act on Default Provision, if there is no special agreement made. 

Legal status

According to Part II of the Act, an LLP is considered a separate legal entity, which means it has a separate legal entity from its partners. Thus, due to this legal status, Singapore LLPs can:

• sue and be sued under its name;
• have a common seal in its name;
• acquire, own, develop, and dispose of property; and
• perform other acts and things in its name, as body corporates may lawfully do and suffer.

Liabilities

Due to the legal status, the liabilities of partners in an LLP are limited to their contribution to their capital. As such, LLP partners will have no personal liability for any business debt incurred by the entity.

LLP partners may be personally liable for their wrongful acts or omissions (but not for the acts or omissions of another partner). They are also protected from other partners’ liability caused by their mistakes. For example, liability claims can be made against a partner and their personal assets, but other innocent partners and their personal assets will remain insulated from such liabilities.

Advantages & disadvantages of setting up an LLP in Singapore

The following are the strengths and weaknesses of having an LLP as a business structure:

Advantages

• An LLP has a separate legal identity and is allowed to own property, enter into contracts, sue, or be sued in its own name.
• An LLP will continue to exist as long as it is not wound up, which is a huge attraction for investors.
• Compliance requirements are more complex than a sole proprietorship but more straightforward than a private limited company.
• Each partner is held responsible for liabilities, but again, they are limited to the extent of their share of investment in the company.

Disadvantages

• Individual partners may enter into partnerships for formal business agreements without the consent of other partners. This may cause conflicts among partners when running the business.
• LLPs lack the ease of ownership transfer. For example,  assets, licenses, and permits must be transferred individually, thus making an LLP in Singapore cannot be sold as a whole.
• Tax exemptions available to private limited companies cannot be applied to LLPs. LLPs are treated as tax transparent, which means they are not taxed as an entity. Instead, each partner is taxed on their share of the profits according to the personal income tax rate.

Registration Procedure for a Limited Liability Partnership in Singapore

The process of establishing an LLP in Singapore is not that complicated. But first, let’s take a look at what you need to prepare before applying for an LLP in Singapore:

Legal requirements

There are several notices regarding management and administration that you should pay attention to:

• An LLP in Singapore requires a minimum of two partners.
• An LLP must have at least one manager that will be responsible for annual declaration, publication of the business name, and registration of change in particulars. The manager must be a natural person, at least 18 years old, and has full legal capacity.

Documents required

To register an LLP in Singapore, the following documents and information are required:

• Proposed name of the LLP;
• General nature of the proposed business of the LLP;
• Proposed registered office;
• Information of the partners:
  • If a partner is a person: full name, identification, nationality, and residential address.
  • If a partner is a body corporate: corporate name, place of incorporation, registration number, and registered office.
• Information of the manager and the consent to act as a manager; and
• Declaration of compliance.

Registration procedure

To register an LLP or any other business entity in Singapore, it is highly advisable to engage a professional services firm that is used to handling company incorporation and familiar with statutory compliance requirements. 

Your company service provider will help collect all required documents from you or your partner, verify them, and then submit them to ACRA. 

Below are several things you need to know regarding the registration process:

• To be able to register your LLP, you must first reserve the name of your LLP with ACRA. You can check its availability using Biz Atom’s Company Name Checking tool.
• The approval process may take approximately 1 – 3 business days after payment of the fee is made. However, it can be extended from 14 to 60 days if the application needs to be referred to another institution for approval or review.
• Upon successful registration, a Unique Entity Number (UEN) and an electronic Business Profile file will be sent to you via email. You may also choose a Special UEN (SUN), which enables you to select, for a fee, a preferred UEN from the list of UENs ordered when registering a Limited Liability Partnership.

What is next after incorporation?

Just like other business entities, an LLP must fulfill several compliance requirements after incorporation, including:

Maintaining accounting records

Every Singapore limited liability partnership must keep and maintain its accounting and all other financial records showing the transactions and financial position of the LLP for seven consecutive years. In addition, the LLP must allow profit and loss statements as well as balance sheets to be prepared from time to time for the fair view of its partners and the Registrar. 

To comply with the accounting requirements mentioned above, it is best to outsource your LLP’s accounting matters to a registered accounting services provider to ensure accounting compliance. 

Filing a statement of solvency/insolvency

The LLP manager must submit to the Registrar an annual statement of solvency or insolvency. Such statement must be submitted within the first 15 months from the date of LLP registration. Furthermore, the declaration once in every calendar year must be submitted at an interval of no later than 15 months.

Opening a bank account

An LLP can open a bank account at any of the several international, foreign, and local banks in Singapore. Moreover, an LLP may open multiple accounts of various currencies (or open a single multi-currency account). Typically, the banks will require you to submit documents, such as:

• Account application form(s)
• Partners’ resolution of bank account and authorized signatories
• Certified true copies of NRIC/passport of all partners and authorized signatories
• Partnership agreement
• Latest printout of the LLP’s business profile

Taxation

Partners who are natural persons will be taxed on their personal income according to the personal income tax rate. In comparison, partners in the form of legal entities will be subject to tax on their share of income in accordance with the corporate income tax rate.

Ready to set up your company in Singapore?

Now that you have learned all the essentials for setting up a limited liability partnership in Singapore, the next step is to get professional assistance to help register your business and fulfill all the compliance requirements. Alternatively, there are many more types of business entities in Singapore that you can consider, for example, a limited liability company. 

Contact us, and we will be more than happy to guide you through every step!

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