Discover All The Pros And Cons Of An LLP In Singapore
Deciding to start your own business is only half the battle; the other half includes coming up with a business plan. One of the most critical parts of figuring out a business plan is deciding your business’s structure.
In Singapore, one of the most common types of businesses that entrepreneurs pursue is a Limited Liability Partnership or an LLP. Read on to find out what it’s about, its advantages, who is it for, and so forth.
What Is an LLP?
A Singapore Limited Liability Partnership is a business structure involving two or more partners incorporating to form a partnership entity. In doing so, they effectively protect each other from liabilities caused by any action or inaction by one partner or more.
The LLP was first introduced in 2005 in Singapore. It was created to combine the advantages of a partnership and an LLC (Limited Liability Company). It was primarily designed for professionals who wanted to build a practice by joining together. This includes licensed professionals such as architects and lawyers, among others.
By structuring a business as an LLP, partners can create separate legal entities so that they can shield themselves from each other’s financial liabilities. However, unlike an LLC, an LLP business doesn’t have as many reporting responsibilities, such as filing for annual returns, among others.
Here is a more detailed breakdown of the pros and cons of structuring a business in Singapore as an LLP.
- The law endows LLPs with a juridical personality, giving it some of the same powers that corporations have.
- LLP structures a business in a way that limits their personal liability.
- Setting up a business as an LLP is a relatively quick and straightforward process, with fewer requirements than incorporating a company.
- LLP registration fees are lower compared to incorporating a company.
- General meetings and share allotments are not necessary for an LLP.
- The process of transferring the ownership of an LLP company is much more complicated.
- Unlike companies and corporations, an LLP is not entitled to receive tax exemptions.
- Because LLP structures businesses in a way that partners can each act on behalf of a company, the business is prone to disputes among partners and management.
- LLP businesses have limited access to financial resources.
At the end of the day, each business structure has its own boon and bane. As such, it’s key to consult a professional and understand which is best for your organisation. If you are a foreigner and plan on structuring a business as an LLP in Singapore, you can seek help by engaging nominee director services.
Nominee director services in Singapore can let you “hire” a local resident who meets the statutory requirements for a fee. Although their role in the company is non-executive, they are still legally required to ensure that the company is compliant with regulations. This means that the name still carries a certain amount of risk and liability.
Because of this, it’s important to work only with businesses offering nominee director services who take out insurances for their nominee directors for hire. This includes, among others, a Deed of Indemnity and Directors & Officers Insurance obligations.
Setting up a business in Singapore requires prospective entrepreneurs to comply and abide by the country’s Companies Act legislation. One such requirement is choosing your business’s structure from three available structures: Sole Proprietorship, LLC, and LLP.
Now that you know the pros and cons that come along with the LLP structure, you can proceed to tackle the rest of the requirements on the list. By working together with reliable, experienced audit firms, their expertise can streamline the setup and get your business up and running sooner than later.
With the help of OneStop Professional Services, plan ahead and prepare for a worry-free business setup. Dedicated to addressing your corporate needs, we offer a number of services like corporate financing, financial outsourcing, auditing, and accounting