Frequently asked questions about Singapore LLP

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Frequently asked questions about Singapore LLP
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Out of the various businesses entity types in
Singapore, only Singapore limited liability
partnership (LLP) and private limited company in
Singapore can be considered to be separate legal
entities. This post is a collection of frequently
asked questions about Singapore LLP to help those
who are looking to understand more about this
business entity type.
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What is a Singapore LLP?

• According to the Limited Liability
  Partnership Act, a Singapore limited liability
  partnership (LLP) is a type of business
  structure where the individual partners own
  liability is generally limited. This clause
  protects the various co-partners from liabilities
  due to misconduct of other partners. This is
  affirmed by the Limited Liability Partnership Act
  Section 163A that the mutual rights and duties
  of the Singapore LLP and its partners are
  governed by the limited liability partnership
  agreement.

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Who should register for a Singapore LLP ?
While the Singapore Limited Liability Partnership
Act 2005 does not restrict the benefit of LLP to
any specific classes/groups, the LLP structure is
more suitable for chartered professions such as
lawyers, accountants or, when two or more such
professionals decide to work together.
Entrepreneurs looking to incorporate a company in
Singapore might find private limited company
incorporation more appropriate.
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In the event that my partner commits something
wrong, would I be liable for that wrong doing as
well?

• As a major advantage of this entity,
  according to ACRA website, Singapore LLP offers
  limited personal liability which means that the
  partners of the LLP will not be held personally
  liable for any business debts incurred by the LLP
  or the wrongful acts of another partner. A
  partner may, however be held personally liable
  for claims from losses resulting from his own
  wrongful act or omission.

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How many partners are required for a Singapore
LLP?

• A minimum of two partners are required for
  the formation of Singapore LLP. There is no cap
  on the maximum number of partners.  

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Who can become partners in LLP?

• The partners can be either natural persons or
  companies. In both cases, liability structure
  remains the same and the respective
  persons/companies will be liable in proportion to
  capital contributed by them to the LLP.

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How are the rights and duties of partners
determined in a Singapore LLP?

• The mutual rights and duties of the Singapore
  LLP and its partners are governed by the limited
  liability partnership agreement that the
  respective partners have signed and agreed upon.
   In the absence of agreement as to any matter,
  the First Schedule of the Limited Liability
  Partnership Act 2005 shall apply.

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How can a partner be removed from LLP?

• According to the Singapore Limited Liability
  Partnership Act, a person may cease to be a
  partner upon his death or dissolution or in
  accordance with the limited liability partnership
  agreement (if any). In the absence of such an
  agreement, they can be removed by giving 30 days
  notice to the other partners.

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Are the rights and liabilities of the other
partners affected in the case of death or
resignation of a partner?

• Any changes in the LLP (e.g. resignation or
  death of partners) will not affect its existence,
  rights or liabilities. The LLP can continue
  functioning and be liable in accordance with its
  agreement or LLP act which ever is applicable.

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What information is needed for a Singapore LLP
registration?

• The following information will be required for
  a Singapore LLP registration
• LLPs proposed and approved name 
• LLPs partners particulars in accordance to the
  identification documents of the partners 
• LLP partners residential address 
• LLPs compliance declaration 
• LLPs registered address details  
• LLPs Consent to Act as Manager and Statement of
  Non-Disqualification Act as Manager if any 
• LLPs registration number, jurisdiction and
  registered address if the partner is a partner

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How are the taxes calculated for Singapore LLP?

• According to the IRAS website, as a
  partnership is not an entity in Singapore law,
  the partnership does not pay income tax on the
  income earned by the partnership. Instead, each
  partner will be taxed on his or its share of the
  income from the partnership. Where the partner is
  an individual, his share of income from the
  partnership will be taxed based on his personal
  income tax rate where a partner is a company, its
  share of income from the partnership will be
  taxed at the tax rate for companies.

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• For instance, if Mr Teo is a partner, and Mr
  Teo is a local Singaporean, he will be taxed at a
  progressive tax rates. This means if Mr Teo is a
  higher income earner, he will be paying a higher
  tax rate with the existing highest personal
  income tax rate at 22. For more information
  about individual income tax rate, click onto
  this IRAS link to find out more.

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What tax benefits are available to an LLP?

• Adding on to the information from the IRAS
  Website, a LLP does not have any corporate tax
  benefits available. The tax exemptions available
  to private limited companies are not available to
  LLPs. LLP is treated as tax transparent which
  means that a LLP is not taxed as an entity.
  Instead each partner is taxed on their share of
  the profits as per the personal income tax
  rates. In short, there are no tax incentives for
  you to set up a LLP in Singapore.

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• Before you plan to register a LLP in
  Singapore, one consideration that you have to
  make is the choice between incorporating a LLP or
  a private limited company. As a private limited
  company has the provision of having partners and
  offers better tax benefits, having a conscious
  decision on the type of Singapore company you
  would like to incorporate is imperative.
• Here at Precursor, we will be happy to
  assist if you want to incorporate a Singapore LLP
  or a private limited company and if you are still
  unsure, we can offer our advice too. With years
  of hands-on experience and award winning team of
  local experts, we will be glad to answer any of
  your questions pertaining to the establishing and
  operating of your business in Singapore!

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• Read here for complete details
• http//precursor.com.sg/frequently-asked-questions
  -singapore-llp/

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Contact us

• Precursor Group Pte ltd.
• Address 60 Albert Street 14-04 OG
  
• Albert Complex Singapore
• (189969)
• Phone [phone]
• Email id clients_at_precursor.com.sg
• Website http//precursor.com.sg

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