Having an acclaimed second place in the World Bank’s Ease of Doing Business 2020, Singapore provides an ideal business ground to set up a company despite being a relatively small nation with approximately 5 million people. Prior to starting a business, the necessary step you have to take is to register a company in Singapore. Weighing the pros and cons of each business entity, you have decided Limited Liability Partnership for your business structure after taking into account your business activity, tax obligations as well as potential personal liability. Regardless of whether you are an aspiring entrepreneur or an experienced business owner, we will explore what are the steps to register LLP in Singapore.
What is a Limited Liability Partnership?
- Limited Liability Partnership, also known as LLP, combines the characteristics of a conventional partnership and a limited liability company (LLC). As LLP is a separate legal entity from its members, it can sue and be sued, and own property in its own name.
- It also suggests that the members are subjected to limited liability. In this form of partnership, individual partners have unlimited liability for their own acts, but not for the debts of the partnership nor the liabilities of the other partners. In a limited liability partnership, the partner can be an individual, a local or foreign company, or another limited liability partnership (LLP). LLC in Singapore is governed under the Limited Liability Partnerships Act (Chapter 163A).
- Before you set up a new company in Singapore, it is crucial to choose an optimum business structure based on your business goals and needs. LLP is highly suitable for individuals engaged in professional services such as lawyers, architects, accountants, and management consultants.
Advantages of Limited Liability Partnership
- As LLP is regarded as a separate legal entity, it can sue and be sued, and own property in its own name.
- Partners of LLP have limited personal liability. While partners are not personally liable for the company’s debts and legal actions taken against the company, they are liable for their own actions.
- LLP has simpler compliance requirements as compared to private limited companies.
- There is perpetual succession as any changes of LLP such as the death or resignation of partners do not affect the existence, rights, or liabilities of LLP.
Disadvantages of Limited Liability Partnership
- There is a minimum requirement of 2 partners
- The transfer of ownership in an LLP is more complicated as compared to a company.
- Individual partners can enter into business agreements without the consent of the other partners
- Not eligible for corporate tax incentives or tax exemptions. Unlike private limited companies, LLP profits are treated as part of the partner’s personal income and they are taxed at personal income tax rates. If the LLP partner is a company, it is required to pay corporate income tax on its share of income from the LLP.
Requirements to register LLP in Singapore
Singapore citizens, residents, and Employment Pass holders can register a limited liability partnership. Foreign individuals and companies may also register a limited liability partnership, but it is necessary to appoint a local manager. Foreigners can also continue to reside outside of Singapore. Registration for Limited Liability Partnership in Singapore is a fuss-free process due to the minimal requirements for an LLP. The requirements include:
- 2 partners (including 1 resident in Singapore)
- 1 company secretary
- A Singapore registered office address
- Minimum paid-up capital of $1
Documents to prepare before you register a LLP in Singapore
Prior to LLP registration with ACRA, here are the necessary documents/details to prepare:
- Proposed LLP name
- Business and registered office address of LLP
- Details of LLP partners/managers
- If partners/managers are individuals: As per the foreign passport of Singapore Identity Card (IC)
- If partners are companies: Details of the company such as registration number, registered address, and place of incorporation.
- Declaration of compliance
- Consent to Act as Manager and Statement of Non-Disqualification to Act as Manager
How to register a LLP in Singapore?
Limited Liability Partnership companies in Singapore are registered with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. There are two ways of registering an LLP:
- Online registration via BizFile+, ACRA’s electronic filing, and information retrieval system
- Engaging the services of a registered filing agent to complete the online application on your behalf
Foreign individuals must appoint a professional services firm to complete LLP registration on your behalf. While Singapore residents may complete the online registration of LLP on their own, it is recommended to engage the services of a registered filing agent. The LLP registration process consists of two steps, name reservation, and registration of the entity.
Steps to register a LLP in Singapore
Step 1: Reservation and registration of LLP name
Step 2: Registration of entity
Step 3: Issuance of Business Profile and UEN
Step 4: Compliance requirements
Step 5: Opening a Corporate Bank Account
1. Reservation and registration of LLP name
- The application fee to register an LLP name costs $15. After the payment, the application will be processed within 15 minutes. An approved LLP name will be reserved for 120 days from the date of name approval and an extension is strictly not allowed.
2. Registration of entity
- After you have completed the registration of the LLP’s name, you will need to register your company with ACRA via BizFile+. The application fee to register an LLP costs $100 and the processing time of the application is 3 working days upon payment of the fees.
- Besides obtaining the relevant licenses or approvals from the other government authorities for your business activity, your LLP company can commence business once registration with ACRA is completed.
3. Issuance of Business Profile and UEN
- After the registration of the LLP is completed, the applicant who filed the registration will receive an email with a URL to download the free Business Profile. The Business Profile is an electronic report which contains the entity’s business registration information. Additionally, you will also be provided with a Unique Entity Number (UEN), an identification number. All business entities must use UEN when transacting with government agencies.
4. Compliance requirements
- The compliance requirements of LLP in Singapore are much simpler and thus likely to incur fewer compliance costs. While LLP is required to keep its books up-to-date, it is not mandatory for an LLP to file its accounts or have them audited.
- Within the first 15 months from the date of the registration of LLP, the manager must submit an annual declaration of solvency or insolvency to the Registrar. Subsequently, a declaration must be submitted once in every calendar year within an interval of 15 months. The LLP is liable to penalties if it fails to submit the annual declarations on time.
- Moreover, the LLP must ensure that its invoices and official correspondence bear the statement that it is registered as an LLP, including its registration number and LLP name.
5. Opening a Corporate Bank Account
- Before you start a business in Singapore, it is essential to open a corporate bank account. A corporate bank account is crucial for your business transactions, asset protection, accounting, and tax filing. Your company can open a corporate bank account with reputable banks in Singapore including DBS, OCBC, UOB, Standard Chartered, HSBC, and Citibank. It is recommended to open a foreign currency or multi-currency bank account if your company is a trading company or has large overseas transactions.
Looking to register a LLP in Singapore?
Singapore company registration is hassle-free if you are familiar with the entire incorporation process. Tetra Consultants strives to provide our clients with a seamless experience when setting up a company in Singapore. Our team of experts will ensure that your Singapore company can be operationally ready as soon as possible.
Contact us to know more about the incorporation process of an LLP in Singapore and the comprehensive service package we offer to our clients for the same. Our dedicated team of experts will revert within the next 24 hours.